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March 23, 2005
Trustee Report
It's scandalous that the social security trustees modified their formula so that the year of insolvency could be brought up one year between 2004 and 2005. What the media SHOULD do is recalculate old trustee reports using the new assumptions to see if the year has really moved closer or further away.
For you social security privatization advocates out there who follow the stock market, this is kind of like using the stocks that made up the S&P 500 last year to calculate the index's weight currently. If you didn't know, the S&P 500, as well as funds that track the index, reweight every year so at the beginning of the year the index consists of the 500 largest publicly traded companies. At the end of 2001, interent darlings whose stock had plummeted were traded for other up and coming companies. You wouldn't use those old internet stocks to calculate the current index.
Similarly, if the trustees think senior citizens are working less and that is part of their formula, the 2004, 2003, 2002 numbers etc should be recalculated using those assumptions, unless they think that senior citizens as a whole magically decided they'd work less in the last year. The same goes for immigration. It is not decreasing, but this year the trustees decided to decrease the expected immigration rate, which brings "insolvency" closer. In light of Bush's proposals to increase immigration and job opportunities for immigrants, the trustees should actually increase the effect of immigration, if anything.
Regardless of the political trickery of the trustees (what do you expect from this administration?) there is one piece of information the press and the population as a whole should not ignore. Social Security goes "bankrupt" in 2041, but Medicare see its bankruptcy in 2020. And yet, for the President, Social Security is a priority as he adds spending pressure to Medicare. This is kind of like scrambling to pay off a credit card that has a $50 balance and a low interest rate while at the same time missing payments on one with a $10,000 balance and a 28% APR.
That's scandalous. Medicare's problems are only 15 years away, and the President and Republicans don't think anything needs to be done. By that measure, I'm perfectly content to start bipartisan talks on Social Security reform with the Republicans no sooner than 2026.
Posted by Chris at March 23, 2005 02:25 PM
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