Friday, July 29, 2011
Problems with the media...
There's little enough real reporting, and soi disant "news" organizations are pleased to report "Democrats say this, Republicans say that, who can tell the truth?"
Any why wouldn't they? Like Rush Limbaugh, they're not trying to be honest or truthful (and I hope you realize those *are* separate issues); they're in it for the money.
Here's a prime example:
This is not just reporting conflicting views; it's making damnfoolish statements.
When first created in 1935, the earliest retirement age was 65, a year older than the average life expectancy. Today, with the average life expectancy at 79, beneficiaries can begin collecting at 62 and might well live for decades into retirement.
Anyone who doesn't understand that life expectancy has increased because more people survive to adulthood doesn't have any business discussing social security.
In 1935, there were a lot of people who died in early childhood. If you have ten people, and one dies as an infant - 1 year old - and the other 9 all live to 75, what's the life expectancy of that group?
9x75 = 675, + 1 = 676. That one person who died at the age of 1 changes the average from 75 down to 67.6.
Figuring that this is a possibility isn't hard; it's grade school math. And finding out that it's true isn't hard either... not if you care enough to learn the truth.
Let's look at the next one:
Meanwhile, the base of support from workers paying into the system has shrunk dramatically. In 1950, there were 16 active workers paying for every retiree.
Wow! That sounds like, in 1950, for everyone who was 65 or older, there were 16 other people who were working - from, say, 18 to 64. Uh... that doesn't sound right.
And it's not. There were 16 workers for each retiree because there were a lot of people who were eligible, but not nearly as many who'd reached retirement age. This is exactly what you'd expect when Social Security eligibility is expanding. The people who made estimates for social security knew this, and planned for it.
Finally, we come to the biggest bit of foolishness.
With more money flowing out and less money flowing in, and the baby boom generation hitting retirement age in force, the Social Security trust fund is expected begin shrinking by 2015. By 2037, the fund is projected to run out of cash, which means it could only pay out as much as it takes in. That would force immediate benefit cuts of about 25 percent if no changes were made before then.
Oh, noes! In 26 years - *26 years*! - the trust fund will be exhausted. Well, that's a crisis. Seriously. I mean, how much could the world change in a mere 26 years?
Let's see, 26 years ago was... 1985. The Apple Macintosh had come out a year earlier - remember that cute "one reason why 1984 won't be like 1984" commercial? I seem to recall it had 128 kilobytes of memory - *128*! That's *twice* the memory of the Commodore 64! And it had fancy new floppy disks that held *720 kilobytes* of data each!
And I think it cost about $2000. I don't know if it came with a modem, but if it did, it probably would have been a 300 bit per second modem... quite a speedy little devil for its day.
Now, that computers and computing have advanced by light years in 26 years doesn't mean that Social Security has no problems - but it does show that if we're facing a problem that's 26 years in the future, we don't have to run around like our hair is on fire! Things will change in 26 years - there will be technological advances we might not even be dreaming of yet.
So we have time to think. And so we can think about reasonable solutions.
So, for example, we can reject stupid ideas like increasing the retirement age. Sure, rich people are living longer after retirement age these days... but poorer people aren't. Increasing the retirement age would be a huge burden on the working poor, and it would force them to stay in the work force longer, increasing the labor pool, and thereby increasing unemployment. (More workers looking for the available jobs means more people unemployed.)
We should also probably reject any benefit cuts until it seems likely that we'll need them.
Finally, in the "Credit where credit is due" department, let's give a nod to Mr. Schoen for getting one right:
As recently as the 1980s, the Social Security payroll tax covered roughly 90 percent of wages, according the Simpson-Bowles commission. But as wages above that cap have grown faster than the cap, the proportion of overall wages has fallen. Today, only 86 percent of wages are collected; by 2020 that will fall to less than 83 percent.
Before we make any other changes, let's seriously consider raising the wage cap - the wages on which OASDI is collected - until it once again covers 90% of wages, the way it was planned to. Then we can figure out what our projected shortfalls are.
Looks like it didn't come with a built-in modem, but typical external modems were faster than 300 baud in those days. I was using a 1200 baud modem from home in 1981 as a grad student, and 2400 was pretty common by 1984. Still, these are minor quibbles: your main point is well taken.
Maybe I've listened to too many oldsters telling me how they got 37.5bps using smoke signals :-)