Sunday, January 16, 2005

The Ostrich Act Continues

Looks like the Ted Kennedy stick-your-head-in-the-sand-and-pretend-there's-no-problem approach is gonna be the democratic party line on social security. The left-wing propaganda machine, represented locally by the Philadelphia Inquirer, is already in high gear. Witness this passage from Jeff Brown's column today:

Not that bad

... let's note that the situation isn't as bad as he
(Bush) says it is, and that there are good remedies he refuses to consider.

The President has described a Social Security funding gap of about $10.5 trillion. In fact, it's about $3.7 trillion spread over the next 75 years, according to the Social Security Administration, whose seven trustees include three Bush cabinet members.


$10 more a week

That would push the tax to 14.29 percent of a worker's wages from the current 12.4 percent. If the tax continued to be shared evenly by employer and employee, the worker's tax bite would go up by just under 1 percent. A person earning $50,000 a year would pay about $10 more a week.

But why not make employers pay the full increase? A 2 percent increase in payroll costs is not so much.

And employers have enjoyed big savings in other expenses.

Tax rates on capital gains, dividends and income have all been cut under Bush. And many employers have saved fortunes by scrapping traditional pensions in favor of 401(k) plans.

Let the boss pay more for Social Security.

This is just so rich I don't even know where to begin.

Let's see...

The $3.7 billion shortfall is a good place.

from the SSA website:

Social Security's Chief Actuary projects that in present-value dollars the total net Social Security cash flow for years 2004 through 2078 is projected to be nearly -$5.2 trillion. When the trust fund balances of $1.5 trillion at the beginning of 2004 are added to this value, we get a financial shortfall (or unfunded obligation) for the 75-year period of $3.7 trillion.

So, the $3.7 trillion that Brown is talking about is purely a fictional budget line. The truth is that the net cash flow is -$5.2 trillion over the next 75 years, and the $1.5 trillion is IOUs from the general accounts - in otherwords, deficit spending that hasn't shown up on the "deficit" figure because it's being swiped from the Social Security trust fund and used to fund other government programs. I don't know where the Bush $10.5 figure is coming from, and I'm willing to concede that the SSA is projecting the problem to be half that. Let's not pretend that $5.2 trillion in shortfall is "no problem" though, ok?

So, given the proviso that I think the problem is half again as big as Brown does, let's move on using his figures.

The first solution he proposes is, of course, the ever-popular entitlement money grab!!! Wow, straight up socialism out of the Inquirer. I'm shocked. Shocked, I tells ya! He proceeds by telling us, why, it's only ten bucks a week. We shouldn't get worked up about that.

Ten bucks a week x 52 weeks = $520 a year. Raise your hand if you remember the Bush tax cuts. Raise your hand if you remember how they were "irresponsible", how they were gonna bankrupt the economy and such. Okay. Hands down. That same "irresponsible" cut was $400 a year. Sure seemed like a lot of money then. What happened, Mr. Brown?

Put another way, $3.7 trillion (Brown's unreasonably low number) / 75 years = $49.3 billion every year for 75 years. Wow. Seems to me I remember the lefties flipping out over a particularly well-publicized $87 billion one time allotment around this time last year. That was a HELL of a lot of money back then, wasn't it? More talk of being "irresponsible" and such. It was growing the deficit by leaps and bounds, devaluing the dollar, and just unbelievable in the face of the "huge" tax cut. But suddenly $50 billion a year for the next 75 YEARS!!! Eh, no big deal. He's sensationalizing it.

And then comes the crown jewel in the leftist toolbox - class warfare. Tried and true, it is perhaps the most effective weapon a statist has to corral the ignorant masses. And I quote "Let the boss pay more for Social Security." Why, oh why, do they not require economics classes for journalism majors? I guess pre-Calculus is just too difficult for these folks to handle, and any course of study that requires they understand it would be judged "unfair" and be opposed by legions of sleep-till-noon, parrot-the-professor, it's-my right-to-party-until-exam-eve types.

I'll simplify it for you, Mr. Brown. Corporations don't pay taxes. Businesses don't pay taxes. They raise their prices to account for added costs. Consumers pay those costs. That's right, you and I and every single Mom buying paper towels at WalMart ultimately pay the taxes. Read here for an explanation using road use taxes on trucks.

All that being said, Mr. Brown never bothers to address the BIGGEST problem that I see with the current social security system, that being one of demographics. Social Security, as it is presently constituted, consists at its essential level of a wealth transfer from younger workers to older workers, and from minorities and men, who have shorter life expectancies, to caucasians and women, who live longer. No wonder the AARP is so in love with the status quo.

As a "baby-buster" who will be expected to foot the bill for the "baby-boomers", I expect that the problem will be most acute during my prime working years, and as such I have the most to lose from the current system. Despite my misgivings about the added involvement of the government in our markets that could very well result from the privitization proposals being put forth by the Bush administration, I'm still supporting anything that seeks to shield me from the current reality that our parents' retirement will fall disproportionately on our backs, with a significantly watered-down system likely to remain by the time we retire.

We still don't know enough about the Bush solution for me to determine if I think it's the way to go, but, contrary to the folks who blanketly oppose any cut in entitlements, any Bush proposal, and burst their spleen any time the two are concurrent, there really is a huge problem. I'm not sure I've heard a perfect solution, but I for one want out of this pyramid scheme - the sooner the better.


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