Andrew Samwick on Social Security

He writes:

If It's Spring, There Must Be a Trustees Report: I always go first to this table, Table IV.B7, which shows the present value of Social Security's unfunded obligations over an infinite horizon. The number is $13.6 trillion, or 3.2% of taxable payroll or 1.1% of gross domestic product over the same horizon. I've blogged extensively about these summary numbers over at Vox Baby. For the present post, I'd like to make two quick points.

1. I tend to focus on the middle number--3.2% of taxable payroll--when describing what needs to be done to Social Security to remove its projected shortfall. The number itself means that if we increased payroll taxes by 3.2 percentage points, from 12.4 to 15.6%, and invested the near-term surpluses at the rate of return projected on Treasuries, there would be enough funds available to pay all projected benefits in perpetuity. That doesn't mean we have to follow that strategy, but it does indicate the size of the projected shortfall. Since the deficits come in future years, I don't see any good reason why we don't change the rules for future contributions and benefits to remove them.

2. Pete points out, as others like CBO Director Peter Orszag have, that the projected increases in per-capita medical expenditures in Medicare and Medicaid become a much larger fiscal challenge than the demographic-driven changes in both Social Security and Medicare expenditures....

Social Security's costs increase to 6% of GDP as the Baby Boomers move from the workforce to retirement. That shift in costs is permanent, even as the Baby Boomers expire, because of longer term trends toward longer lives and fewer children. That projected increase is swamped by the impact of projected medical expenditure increases. And unlike Social Security, there is very little in the way of projected revenue sources that aren't general revenues....

I think it is important to discuss comprehensive reform. The sooner, the better. On Social Security, I've put my name on a plan that could serve as a compromise. On Medicare, I think the best option is to raise the age of full eligibility for future beneficiaries, allowing younger retirees to pay their way in. But that's a blog for another day.

Comments

[anne]

"On Social Security, I've put my name on a plan that could serve as a compromise."

On Social Security, all Andrew Samwick cares about is destruction; but estruction is what being a Republican means.

[Rob]

Ah yes the Samwick we must cut Social Security benefits because the rich got tax cuts in 1980s compromise!

[Bruce Webb]

Well IV.B7 is not my first stop but it is not a bad place to start.
http://www.ssa.gov/OACT/TR/TR08/IV_LRest.html#267012 and you do see that Infinite Future has an 'unfunded liability of $13.6 trillion and a payroll gap of 3.2% and a GDP gap of 1.1%
But what happens if you link to that same table in the 2007
http://www.ssa.gov/OACT/TR/TR07/IV_LRest.html#wp267012 Well the liability remains unchanged at $13.6 trillion but the payroll gap was significantly higher at 3.5% as was the GDP gap at 1.2%,
Or lets take 2006
http://www.ssa.gov/OACT/TR/TR06/IV_LRest.html#wp267012 $13.4 trillion, 3.7% payroll gap, 1.3% of GDP.

Which is to say that measured by either payroll gap or as a percentage of GDP 'unfunded liability' has steadily shrunk. I take a little different lesson from the number series: 3.7%, 3.5%, 3.2% & 1.3%, 1.2%, 1.1% than Prof. Samwich does. Social Security on balance has showed itself to be more healthy than projected in at least 9 of the last 11 years, and even in the two years it didn't (2005 and 2006) when measured in payroll gap over the 75 year actuarial gap, year end balances still came in ahead of projections.

[pgl]

While Andrew notes the alleged long-run insolvency of the SSTF, Bruce Webb and Paul Krugman take note of the real news - the metric that folks use to gauge the alleged long-run shortfall decreased significantly.

[anne]

A $3 trillion war, no problem. A massive and growing Social Security surplus, big big problem. Such is the new economics. I guess the war has morphe to a war against Social Security or against my grandma and my ma. Say it ain't so.

[Bruce Webb]

Sorry Professor Samwick, that truly was a typo.
___________________
Where is my first stop? Well I am a traditionalist, I like to see how the Trustees choose to summarize the outlook.
http://www.ssa.gov/OACT/TR/TR08/II_conclu.html#86802
"Under current law the cost of Social Security will soon begin to increase faster than the program’s income because of the aging of the baby-boom generation, expected continuing low fertility (compared to the baby-boom period), and increasing life expectancy. Based on the Trustees’ best estimate, program cost will exceed tax revenues starting in 2017 and throughout the remainder of the 75-year projection period. Social Security’s combined trust funds are projected to allow full payment of scheduled benefits until they become exhausted in 2041. At that time annual tax income to the trust funds is projected to equal about 78 percent of program costs. Separately, the OASI and DI funds are projected to have sufficient funds to pay full benefits on time until 2042 and 2025, respectively. By 2082, annual tax income is pro jected to be about 75 percent as large as the annual cost of the OASDI program.
Over the full 75-year projection period the actuarial deficit estimated for the combined trust funds is 1.70 percent of taxable payroll—0.26 percentage point smaller than the 1.95 percent deficit projected in last year’s report. This deficit indicates that financial adequacy of the program for the next 75 years could be restored if increases were made equivalent to immediately and per­manently increasing the Social Security payroll tax from its current level of 12.4 percent (for employees and employers combined) to 14.10 percent. Alternatively, changes could be made equivalent to reducing all current and future benefits by about 11.5 percent. Other ways of reducing the deficit include making transfers from general revenues or adopting some combina tion of approaches."

Wait a minute! Professor Samwick tells us we could fix the gap by: "The number itself means that if we increased payroll taxes by 3.2 percentage points, from 12.4 to 15.6%, and invested the near-term surpluses at the rate of return projected on Treasuries, there would be enough funds available to pay all projected benefits in perpetuity."

The Trustees say we need an increase of 1.7% to 14.10%, whereas Prof Samwick says we need to increase it by 3.2% to 15.6%. Why the difference?

Because Prof. Samwick prefers to use Infinite Future (a concept first introduced with the 2003 Report) rather than the traditional 75 year Actuarial window the Trustees have used for decades. Well frankly in my opinion Infinite Future was a gimmick introduced solely in order to allow the use of scary numbers like $13.6 trillion and not incidentally facilitate the sale of the plan then White House Chief Economist was cooking up, now published at colleague Liebman's Harvard KSG site under http://www.hks.harvard.edu/jeffreyliebman/lms_nonpartisan_plan_description.pdf

It makes for interesting reading and everyone involved in this debate really is obligated to do so. It is particularly instructive to observe that LMS calls for an across the board increase in payroll tax of 1.5% along with an additional package of targeted tax increases on the middle class along with benefit cuts and changes to retirement age for a total of 5.2% payroll equivalent and doesn't even guarantee a 100% result. Indeed for a lot of workers simply accepting the 1.5% increase and rejecting the benefit package would make for a better result. (see Table One) and this using the 2004 numbers used in the plan.

Today LMS is fatally exposed to a 75 Year Actuarial gap that is now down to 1.7% and a prospective benefit at Trust Fund Depletion of 78% of the scheduled benefit, up significantly from the 75% in last years plan, and markedly up from the 73% when the President first addressed this in Nov 2004 and in the SOTU in 2005.
http://www.ssa.gov/OACT/TR/TR04/II_conclu.html#wp86802

Samwick: "I think it is important to discuss comprehensive reform. The sooner, the better. On Social Security, I've put my name on a plan that could serve as a compromise." Those of us who have been telling us for years that we can't afford to wait because the fix just gets more expensive over time are kind of fudging. Because it hasn't. Doing Nothing since 1997 meant the equivalent of a 2% tax cut equivalent annually simply by not adopting a comprehensive reform package. A Trust Fund scheduled to go to Depletion in 2029 is now not scheduled for that outcome until 2041, a payroll gap set at 2.23% in 1997 in the face of Inactivity on this 'Crisis' is now down to 1.7%.

Samwick does have a plan. A horribly worker unfriendly plan that privileges the interest of far distant generations over our parents, ours, our children and even our grandchildren. 75 Years is a plenty big planning window, it certainly covers anyone in the workforce today, my youngest great niece will be 79 years old in 2082. Using Infinite Future as a starting point needs some more specific justification than it has gotten to date.

[Joe]

In all fairness, almost nothing changed in the finances of the system from this year to last. No improvement. The reason is that the so-called improvement is actually a realization that the trustees have not had an accurate method for projecting immigration flows. So the change is due to more accurate means of projecting.

All that means is that if they used the same methods last year, the change from '07 to '08 would be trivial.

There is plenty to argue about what you think will happen in the future to wage growth and mortality and immigration, but this latest tick is not about those issues.

[Rob]

Bruce--

I don't know if you seen me ask him this before or not, but I asked him why can't we just wait it out. And eh said it was amoral responsibility of those who benefited from the deficits 1980s to pay back some of the gain they received from borrowing instead of passing it on. The fact that those who received the gain and those who rely on Social Security benefits hardly overlap doesn't seem to matter to him.

[Tony]

I agree with Rob, but I'll state it more bluntly. Cut benefits now, and screw the Baby Boomers. They're leaving my generation $9 trillion in debt; they can learn to enjoy cat food.

[Rob]

Umm that wasn't my point at all. Cutting Social Security benefits in order to pay down the deficit/prevent further borrowing is a huge tax shift from the rich to the poor. Samwick glosses over that point.

[RW]

"US Government has no intention of coming through on its Social Security obligations"

There is no plausible evidence in support of assertions such as this and considerable evidence against them but none-the-less the general theme that "social support won't be there for me" seems quite popular, particularly among the quasi-libertarian and/or younger set (gen-x on down): Not sure if its cynicism, urban legend, despair, veltschmerz, some kind of self-justification, angst, or what -- anyone have any ideas?

[RW]

Ach, I meant weltschmerz (spelled with a 'w' pronounced as a 'v'); too much phonetics this week (sigh).

Still, the issue intrigues me: Alienation among adolescents is a common state, but among 30- and 40-year olds?

[Bruce Webb]

RW I am on my iPhone so can't cut and paste but Google on some combination of ' Butler and Germanis' ' ' Leninist Strategy' ' Cato Journal Fall 1983' and you will come across the seminal plan to convince Gen Y and Libertarians that Social Security simply wouldn't be there.

The plan is in retrospect shockingly cynical but may represent the single most successful marketing program ever devised by conscious design. Almost every speech Bush or for that matter the Trustees ever gave could be cut and pasted froem this strategy plan.

Cato literally gathered all the anti Social Security players at a conference in June 1983, published the papers in the Fall 1983 issue of the Cato Journal under the title "Social Security: Continuing Crisis or Real Reform" and then all parties stayed relentlessly on message waiting for the right combination of President and Congress.

I know it sounds like paranoia but then I was not the guy that decided to publish "Leninist Strategy" in a publicly available format. You have to take your rhetorical hat off to these guys: brilliant, methodical evil bastards that they may be.

Sometimes I feel like George C Scott in Patton: "Romnel you Bastard! I read your book!!"

[Bruce Webb]

Tony about 25% of that debt is the result of Baby Boomers kicking in extra since 1983 to build the Trust Funds only to see BushCo use the money to finance tax cuts for themselves.

Don't want to pay it back? Stop borrowing it at a rate that now has hit $200 billion a year. I got other uses for the money and now I get my creditors saying I deserve being stiffed. Boomers paid their way, we have left you a Social Security system fully funded until the youngest Boomer is 77. At least as long as you continue to honor the Full Faith and Credit of the United States. If not this codger is fully prepared to willing to bring my cane to the discussion. Assuming I am still vertical and sucking air at 84 years old. Frankly the notion that Boomers are exclusively responsible for $9 trillion in Reagan/Bush I/Bush II debt is both historically wrong scapegoating and a cause for offense. Please don't buy into the narrative that everything is the fault of Dirty Fucking Hippies, frankly our track record from the Clean Air Act to Iraq is on the whole pretty damn good.

[RW]

Holy smog Batman! I mean Bruce: A copy of the prop piece can be found at http://tinyurl.com/2vqhvk

It really looks like the generation(s) that prided themselves on their skepticism have been seriously played. Fascinating, who would have thought a big con like that could have been pulled off that easily.

Actually that's silly, big cons work for the same reasons the big lie does, because the cons don't flinch and the sucker wants to believe.

Well, at least I can consciously include Stuart Butler and Peter Germanis among the swine-horde that, in a truly just world at least, would be headed to the sticking pole winch.

[anonymous]

brainstorming post

I think there is an amazing amt of wiggle room to "maintain" social security without "drastic" change - raise payroll tax rate, make payroll tax rates more progressive (graduated rates - breaks or reduced rates for small biz with low revenues, and higher rates for very higher amts of income or more mature business), more tiers for receiving benefits(allow people to defer longer and get a bigger check, or receive sooner and get small check), delay benefits, reduce benefit levels, subsidize social security with income or other taxes (currently social security and payroll taxes indirectly subsidize the inadequate income and other taxes), etc, etc, etc

One key is the idea of "gradual" vs. sudden, drastic, and radical change. The latter type of talk spooks people and is really not necessary for a system that is currently solvent.

personal accts are an interesting idea but may need to be implemented by a democrat -- people currently don't trust Republicans, and people don't want something too radical or drastic.

I was watching Mike Tyson's life story (boxing anyways) on tv recently. He made something like $300 million and yet still managed to go bankrupt. Mike Tyson probably did not pay all that much in payroll taxes relative to his earnings. Maybe Mike should have paid more into social security - at least social security or govt programs will be there for him and the other $300 million may be gone.

Maybe Bernie Ebbers should have paid more in payroll taxes toward the middle-to-end of his Worldcom days. In the end, he went broke and the govt may have had to pick up the tab. Early on, excessive payroll taxes may have stifled his entrepreneurship, so maybe some sort of break on taxes for new or small business would be okay (add more progressivity to payroll tax - currently may be regressive).

[anonymous]

Changes made in the early 1980s are one major reason social security is okay at the current point in time. During Reagan, a *Republican*, the govt essentially raised tax rates (payroll rates, that is) and added more progressivity in social security taxation. If Republicans wanted to build or maintain the Reagan legacy, they could look to the changes in 1983 for ideas.

http://www.ssa.gov/history/1983amend.html

excerpt:

Advances scheduled increases in Social Security tax rates. Social Security tax rates (which include the Hospital Insurance tax rates) for employers and employees will increase to 7.0 percent in 1984, {1} 7.05 percent in 1985, 7.15 percent in 1986-87, 7.51 percent in 1988-89 and 7.65 percent in 1990 and thereafter.

[...]

Beginning in 1984, includes up to one-half of Social Security benefits as taxable income for taxpayers whose adjusted gross income, combined with half their benefits and any tax-exempt interest they may have exceeds $25,000 for a single taxpayer and $32,000 for married taxpayers filing jointly. Benefits received by married taxpayers filing separately are taxable without regard to other income. Appropriates amounts equal to estimated tax liability to the Social Security trust funds.

[...]

Raises the age of eligibility for unreduced retirement benefits in two stages to 67 by the year 2027. Workers born in 1938 will be the first group affected by the gradual increase. Benefits will still be available at age 62, but with greater reduction.

[Nat]

Bruce, as always, thanks for the work on this topic.

As for my two cents worth: the infinite horizon bs is just a smoke screen for the real issue which is the swing from a surplus to a deficit in 2017. Or even earlier when the surplus begins to shrink. The wealthy of America like their subsidy. Anyone who advocates increasing payroll taxes is either a thief or an idiot. That is pouring more money into a surplus now that certain political powers do not want to repay in the future.

Max Sawicky had the ultimate solution for 2041 should the Trust Fund actually be exhausted in that year: just keep paying the difference from the general fund. After all, what we are talking about in 2041/2042 is a potential tax cut in the general fund. The problem can be fixed by passing legislation that guarantees the general fund will cover whatever shortfall there is in the Social Security pay as you go system to perpetuity.

[anonymous]

the $13.6 trillion needs more discussion - how it was calculated, key assumptions, etc. for example, what is the assumption on worker productivity growth in the $13.6 trillion? professor D: any perspective on the productivity assumption in the $13.6 trillion number?

[Bruce Webb]

The $13.6 trillion is based on the Trustees ultimate productivity assumptions (as well as other economic and demographic ones).
Ultimate Productivity 1.7% (from Table V.B1)
Ultimate Real GDP 2.1% (from Table V.B2)
2008 Report List of Tables http://www.ssa.gov/OACT/TR/TR08/trLOT.html

Why we expect the economy to slump to these levels over the next ten years and stay there until heat death of the Sun has never been explained to my satisfaction, nor has anyone explained how private accounts would offer a path out. In November 2004 Dean Baker put up the No Economist Left Behind challenge at http://www.cepr.net/index.php/the-no-economist/policy-analyst-left-behind-test-for-social-security/
And followed up with a paper the next year with some co-authors whose names might sound kind of familiar with 'Asset Returns and Economic Growth' by B. Delong, D. Baker, and P. Krugman
http://www.j-bradford-delong.net/movable_type/BDK-BPEA.pdf

BDK seems to stay kind of neutral of the question of whether the projections are in fact pessimistic, but show pretty clearly (I guess-too many formulae for me) that you are not going to get 6.5% returns on stocks under Intermediate Cost economic assumptions.

[Andrew Samwick]

Thanks for the feedback. This new post

http://www.capitalgainsandgames.com/blog/andrew-samwick/195/more-trustees-report

picks up on some of Bruce's comments and links to a post from a year ago on how I view Social Security as part of the larger fiscal picture.

[RW]

"... No Economist Left Behind challenge..."

This was a first-rate piece of thinking as was his follow-up with Delong and Krugman. It also led to a very useful piece by Yglesias (still available at http://tinyurl.com/33wl8g his old blog) which considered the Baker Test and current (at that time) arguments for social security privatization within the context of Lakatos's philosophy of science.

The question for Lakatos (and us) was and is: even in the physical sciences it is possible to come up with some explanation for recalcitrant data that will preserve a cherished theory or core set of assumptions about the world, and in the social sciences it is almost always possible, so what stops that process? According to Lakatos it is when the only purpose new explanations (ad hoc hypotheses) have is to account for another set of inconsistent data, preserving the core belt of theories, but which are otherwise barren, leading neither to new questions nor new knowledge; i.e., the program must be considered degenerate.

To excerpt Yglesias near the end of the post:

"[privatizers'] are toying with a mathematical problem posed to them by Dean Baker and other Social Security supporters. ...looking at their hard core of premises, and showing that, yes, it's possible to save the premises in light of the data. But this is ...always possible in some sense. At some point, you need to stop playing the game ("how can I save the premises...") and start asking if the moves you need to make are really sensible moves. A good test is whether or not you're willing to pursue your new auxiliary hypotheses and stand by them as useful principles for purposes other than saving the hard core."

I believe what we are seeing in the economy and markets now is an enormous empirical challenge to neoconservatism (deregulation, low and/or regressive taxes, etc.) but not entirely in favor of neoliberalism (e.g., global trade and labor imbalances). That all the nasty data can be explained away is a given -- and not always stupidly like Ben Stein or Larry Kudlow either -- but if the theoretical core of either program is true then, even assuming necessary adjustments (e.g., auxiliary hypotheses), a great deal more must be provided than an explanation for the failure to anticipate events, a path must open. JMO

[Barkley Rosser]

Tony,

The only reason social security will not be there for you is if you support the assholes who want to cut your benefits, not just those of the baby boomers. Heck, are you one of the many who is unaware of the fact that even if social security goes "bankrupt" in 2041, retirees would still receive more than 120% in real terms than do curren recipients. No, I did not think you knew that. You are probably one of the ones who thinks it is more likely you will see a UFO than that you will get ss bennies.

[anonymous]

If It's Spring, There Must Be a Trustees Report
Mar 26 Andrew Samwick Medicare Social Security

"The number itself means that if we increased payroll taxes by 3.2 percentage points, from 12.4 to 15.6%, and invested the near-term surpluses at the rate of return projected on Treasuries, there would be enough funds available to pay all projected benefits in perpetuity."

perspective:
I don't understand putting the extra 3.2% money into Treasuries, which would mean that the money owed to social security beneficiaries by the fed govt would be backed by another fed govt IOU (treasuries). This seems like a circular reference. If the U.S. social security system did want to set aside some cash collections as a store-of-value, treasuries do not seem like the greatest idea for the U.S. social security system. I understand Treasuries may be the "risk free" rate, but I do not see how doubling-down on credit exposure to the fed govt clearly is risk-free in this instance.

Also, treasuries are a really low rate of return right now - possibly a negative real rate of return. I don't see how treasuries unaccompanied by other asset classes would be the appropriate investment for funds that may not be needed for 10+ years. Treasuries may have a negative rate of return (currently) compared to health care costs (common to retirees) and education costs (We might be better-off using the cash collections to prepay college for future generations vs. investing in treasuries). Look at recent news on S Korea.

S Korea pension fund shuns US debt
By Song Jung-a in Seoul, Andrew Wood in Hong Kong and Michael MacKenzie in New York

Published: March 26 2008 19:39 | Last updated: March 26 2008 19:39

As for assumptions, real wages may not be stagnating for many in the U.S. during the last several years. So even holding the payroll tax rate constant, social security receipts are probably in some state of change in recent periods. And if you raise the employer portion\rate of payroll taxes, employers may shrink payroll, further hurting workers in the short-run (supply side economics - tax labor more and you will get less labor). Any 3.2% increase would need to be implemented over years and years - not instantly.

http://www.nytimes.com/2006/08/28/business/28wages.html

We may need more creative solutions (married people pay higher rates on payroll taxes vs. single people, older people pay higher rates than younger people, etc).

[anonymous]

inadvertent typo:
"real wages may not be stagnating"

should be

real wages may be stagnating

[Bruce Webb]

When Prof. Samwick states "The number itself means that if we increased payroll taxes by 3.2 percentage points, from 12.4 to 15.6%, and invested the near-term surpluses at the rate of return projected on Treasuries, there would be enough funds available to pay all projected benefits in perpetuity." he is not at all suggesting that that extra income be invested in Treasuries. Instead his plan relies on diverting that amount into a system of PRAs (Personal Retirement Accounts) that presumedly would be invested in anything but Special Treasuries.

LMS proposes a mix of tax increases and benefits cuts that over a period of decades delinks the General Fund and Social Security. Not a bad policy goal in itself but in my view implemented in an extremely worker unfriendly way. But nobody should take my word for this, you really need to read the short nine page plan for yourselves.
http://www.hks.harvard.edu/jeffreyliebman/lms_nonpartisan_plan_description.pdf
Note for the unwary. Table 2 is a little deceptive if read out of context. It does not account for the 1.5% across the board payroll tax increase proposed under LMS on the grounds that that money never actually hits the Trust Fund and so doesn't effect actuarial balance and so didn't need to be scored by the SSA Office of the Chief Actuary. The total package of tax increases and benefit cuts amounts to 4.2% of payroll equivalent for workers making under the cap. (The cap increase takes the total impact to 5.2%, but that 1% is concentrated among that minority who have earnings over the current cap. Whether their better return under LMS (Table 1) offsets the extra tax burden is a good question. I wouldn't think so, investing that money directly would seem to be a better option for these high income workers.)

[Bruce Webb]

"We may need more creative solutions (married people pay higher rates on payroll taxes vs. single people, older people pay higher rates than younger people, etc)."

Well the Trustees actually present us with a solution. It requires growing the economy long term at 2.9 Real GDP, admitting some more immigrants, and perhaps having more babies. Its called Low Cost.

Prof. Samwick once told me (in comments) that Low Cost was too optimistic but I don't particularly see why. The fertility assumptions may be high but this would seem to be offset by the pessimistic productivity and immigration assumptions, at least up to the 2007 Report. The 2008 version of Low Cost is kind of eye opening, if those numbers hit we are looking at a vastly over funded Social Security system. Check out outcome one in the following figure:
http://www.ssa.gov/OACT/TR/TR08/II_project.html#112699
Figure II.D6.—Long-Range OASDI Trust Fund Ratios Under Alternative Assumptions [Assets as a percentage of annual cost]
It is truly amazing what difference in output you can get from relatively small changes in input.

[Bruce Webb]

RW apropos that Yglesias piece.

It is my understanding that most of those who claimed to meet the No Economist Left Behind challenge did so by proposing a portfolio based largely in overseas investments and so picking up on better productivity abroad. And maybe the dollars work out given that narrow focus. But the larger question is how wage workers would be able to fund private accounts given those productivity numbers at home. At one level it is fine to say 'invest in emerging markets' but if 1.7% domestic labor productivity and 2.1% Real GDP are leading to 1.1% Real wage differential as current Intermediate Cost assumptions suggest can you really shake free the investment dollars you need?
http://www.ssa.gov/OACT/TR/TR08/V_economic.html#188118

As to this:
"At some point, you need to stop playing the game ("how can I save the premises...") and start asking if the moves you need to make are really sensible moves."
Well this depends on how you define 'sensible'. If your fundamental goal is to shore up retirement security after 2041 you get one set of answers. On the other hand if your goal is to discredit the New Deal on what are fundamentally ideological grounds you get another set. There are quite a large number of economists who have literally devoted their entire careers to the cause of privatization, and many others who have built the concept of Social Security shortfall and 'bankruptcy' into their worldview in support of a 'Big Government is the problem' philosophy. There is a lot more at stake here than the narrow question of solvency or of viability of private accounts under various sets of assumptions. Instead we are looking at Round 12 of a boxing match whose opening bell was the 1936 presidential contest between Landon and Roosevelt. I really don't expect the other side to throw in the towel, instead it will require a knockout blow from the data tables in some upcoming Report. My personal bet is that the fight will be over in 2012, it just depends on how many shots these guys can absorb in the meantime.

[anonymous]

one more... payroll tax funds could be used to prepay education or training other-than-college: mechanics, plumbers, electricians, etc, vs. invested in treasuries.