Dean Baker in Wa*shin*gton Po*st

[sawicky@xxxxxxxxxx (Max Sawicky)]

My hero Dean Baker breaks into the op-ed page:

mbs

             Social Security Scaremongering

             By Dean Baker and Mark Weisbrot

             Monday, December 13, 1999; Page A25

             For decades critics of Social Security have brought to the
             public a symphony of misinformation and disinformation,
             embellished with the occasional lie. This effort began to bear
             fruit a few years ago when most of the public, as well as the
             press, became convinced that the system needed an overhaul.

             Most of the deception is carried out through manipulating the
             official numbers -- that is, the projections published each
year
             by Social Security's trustees. It is easy to create the
             impression of impending doom, for example, by pointing to
             the retirement of the baby boomers (beginning in 2008), the
             expected doubling of the elderly population by 2035, etc.

             But these dire warnings shrink to irrelevance when the other
             side of the equation is taken into account: namely, the growth
             of the economy. The system is sound without any change for
             the next 35 years. To cover the next 75 years, if one takes
             such projections seriously, would require additional revenues
             of less than one percent of our national income.

             All this is just the voice of the official numbers. But these
too
             are not insulated from the influence of Social Security's
             adversaries. To see how this influence plays out, look at the
             fine print.

             Earlier this month a panel of experts charged with advising the
             trustees of Social Security on economic and demographic
             projections presented its recommendations. The panel was
             headed by a former Reagan administration official who has
             made no secret of his desire to cut entitlements for the
elderly.

             The newspaper accounts, including a Dec. 7 Post editorial,
             highlighted the panel's recommendation to raise projected life
             expectancy, which would make the program's finances appear
             much worse. Meanwhile, little attention was paid to a more
             important and curious recommendation: The panel lowered its
             estimate -- as compared with its forecast four years ago -- for
             growth of wages and productivity.

             This is startling, given that for the past four years the U.S.
             economy has seen exceptionally strong economic growth.
             Productivity and wage growth have shot up. One could ignore
             these years as a fluke, but nothing in the record warrants
             lowering economic projections.

             In the four years since the last panel met, real wages have
             increased at more than twice the rate that the panel projected.
             If real wages continue to grow at the pace of the past four
             years, the Social Security system will be solvent for 60 years
             without any changes.

             If the Social Security trustees just used the same wage
             projections advocated by the 1995 panel, adjusted for some
             measurement changes by statistical agencies, the system
             would be solvent for 40 years, even assuming greater
             longevity. Further, with higher wage growth, the modest
             changes needed to support the system into the indefinite
             future would be affordable. In short, using any remotely
             realistic projection for the growth of wages and the economy,
             the Social Security system will be solvent into the
stratosphere
             of America's science-fiction future.

             The panel's report showed other anomalies too. For example,
             the productivity growth it forecast is slow compared with the
             rates of other industrialized nations. If we are to believe
these
             projections, 21st-century America is going to be a fairly poor
             country compared with the nations of Western Europe.

             Nonetheless, without serious public dissent, the panel's
             recommendations probably will be accepted. Politicians and
             lobbyists then will use the new numbers to tell people that we
             have to raise the retirement age, cut Social Security benefits
or
             privatize the system.

             There are some important lessons here. First, the process of
             generating and presenting these numbers is far too vulnerable
             to political manipulation. The 75-year planning period used by
             the trustees also is absurdly long. Given the vast
uncertainties
             in the assumptions -- for example, the range of population
             projections for 2075 varies by 160 million people -- it is all
too
             easy to come up with some kind of financing gap somewhere
             down the road. This gap, however small relative to future
             income, is then magnified by Social Security's opponents into
             a "crisis" that undermines public confidence in the program.

             Finally, any shortfall that Social Security may have in the
             future can result only from a dismal economic performance.
             So the next time you hear politicians or Wall Street executives
             say that Social Security needs to be "fixed," ask them to fix
             the economy instead.

             The writers are co-directors of the Center for Economic and
             Policy Research.

                 © Co*pyri*gh*t 1999 The Was*hingt*on P*os*t Company