Social Security Reform – Enough to Make One Curse

Let’s start off with a civil exchange of thoughts from Andrew Samwick and Mark Thoma. Andrew writes:

The President used to go around the country making speeches of the form, “Social Security is in financial trouble. We need voluntary personal accounts.” The speeches made no sense, as many people (like Mark) rightly pointed out. There is no connection between restoring solvency and voluntary personal accounts … Okay, it’s a new day, with new leadership in Congress. The Administration cannot now presume to dictate the terms of the debate. The Administration essentially has to win one key point about the goals of the debate: that the standard for reform should be that under current projections, the final product achieve “sustainable solvency” for the system: a positive and rising Trust Fund balance at the end of the projection period … The message to Democrats is as follows: go find a plan that achieves sustainable solvency without personal accounts and then we can talk.

Fair enough, but Dean Baker might suggest that the size of the benefits cuts needed for long-run solvency are not that large. But why on earth do we have the get the usually gentle Max Sawicky cursing at this lady:

It also means that the White House is willing to listen to other ideas, administration officials said, including personal savings accounts that do not involve diverting Social Security taxes, as well higher payroll taxes to help cover a projected explosion in Social Security costs after members of the baby boom generation begin to retire in 2008 … The big three entitlement programs eat up 8 percent of the country’s total economic output and are projected to double in cost over the next 50 years, creating a budget hole that must be shrunk by cutting benefits or filled by raising taxes.

When Max wasn’t cursing at Lori Montgomery, he managed to draw a neat graph showing “costs” as a percent of GDP (slowly rising) and “the drain on the non-Social Security budget” also as a percent of GDP, which actually starts off with non-interest surpluses from now until 2018. But pay close attention to Max’s green line, which he calls the “money legally owed to the program”. It seems the Social Security Trust Fund continues to grow and best yet – earns interest. OK – after a while, it starts to decline as the baby boomers take the retirement benefits out that they’ve been putting into the program for decades.

I trust Lori Montgomery does not like to be cursed at by gentlemen, but until she understands this issue – could she cease and desist from writing such garbage in the Washington Post? Sorry to include such this turkey amongst some good contributions from Andrew, Dean, Mark, and Max. Happy a nice Thanksgiving Day.