The Nation - Selected Editorial

Max Sawicky sawicky at
Tue Jul 21 11:21:16 PDT 1998

> Is there any research that examines or posits a minimum (for social
> stability) long-term productivity growth rate? I have problems believing
> the 1% rate used by the SSA, especially since a 2% rate may aleviate
> most, if not all, of the shortfall problem. Also, it seems that a
> significant proportion (perhaps 30%) of the hypothesized 1% growth rate
> would be eaten up by changes in the age composition of the US
> population.
> Does anyone know of anyone doing work in this area?

See EPI reports by Dean Baker on Social Security such as "Defusing the Baby Boomer Time Bomb."

Tom said:

> The great liberal hope sort of shot himself in the foot in the next to
> the last sentance of this editorial. No mention of raising the
> contribution level above $68,400. No mention of the pessimistic
> projections being an understatement---the end of the world as we know it
> might be a better way to describe the actuaries projections on the
> Social Security trust fund!

The projections are arguably too pessimistic and used to justify bad reforms, such as privatization of one sort or another. See Baker above. Don't believe the hype!

The problem for advocacy in this area is that any explicit proposal for a tax increase to finance the existing system is a political loser. That's because the public thinks privatization will give them gain without pain. Fact is any type of privatization will entail tax increases and benefit cuts. Once this is understood, the public can compare good and bad tax increases.

EPI will be putting out a paper justifying the very small tax increases that would be necessary to finance all currently legislated benefits. These will include raising the wage base, as you mention. Note that nothing actually would need to be done for some time, but for the 75-year actuarial projections of the trust fund.

Things are actually starting to turn around on this issue. Some government agencies have issued reports critical of privatization, the press coverage has been improving, and liberal Dems are starting to gear up.


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