I thought I remembered Dean Baker once saying that the rate would have to be something like 3% at least to wipeout the projected SS shortfall singlehandedly. Is this not right? Whence 2.5%?
Seth Ackerman FAIR
> -----Original Message-----
> From: Doug Henwood [SMTP:dhenwood at panix.com]
> Sent: Wednesday, July 29, 1998 1:52 PM
> To: lbo-talk at lists.panix.com
> Subject: RE: Privatization Pep Rally
>
> James Baird wrote:
>
> >If you don't think it's biased, I'm afraid you aren't reading it
> closely
> >enough. Doug has done some excellent analysis of this, so I'll let
> him
> >fill in the details. The basic point, though, is that in order to get
> >their conclusion that the system is going broke, the trustees assume
> >economic growth for the the next few decades at sub-Depression
> levels.
>
> Yes. I haven't read their latest, but last year's report had a 1.4%
> average
> growth rate for the next 75 years, lower than the 1930-40 growth rate.
> At
> 2.5%, the funding problem disappears. Privatizers never explain how
> the
> stock market could continue to return 7-10% a year with the economy
> growing
> at 1.4%. I suppose the profit share of GDP could rise to 100%, but
> that
> might bring about a little realization crisis.
>
> Doug
>
>