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[Gene GeRue <genegerue AT ruralize.com>]

If you are in a hurry, just read the last graph.


EDITORIAL

About That Number

Published: March 24, 2005

The Social Security trustees issued their annual report yesterday and said 
that by one measure, the shortfall in Social Security's finances jumped 
from $10.4 trillion last year to about $11 trillion this year. Eleven 
trillion dollars! The trustees, in service to President Bush's alarmist 
warnings about the need to do something drastic about Social Security, are 
dishing up some misleading numbers.

It's bad enough that the trustees began some of their calculations with 
that $10.4 trillion figure. It's arrived at by projecting the system's 
shortfall over infinity, rather than the usual 75-year time frame - as if 
the system's finances 10,000 years from now are a legitimate policy 
concern. Moreover, no less an authority than the American Academy of 
Actuaries is already on record debunking infinite projections as conveying 
"little if any useful information about the program's long-range finances" 
and "likely to mislead anyone lacking technical expertise ... into 
believing that the program is in far worse financial condition than is 
actually indicated."

Compounding the subterfuge is that the difference between this year's $11 
trillion eyepopper and last year's number - $600 billion - is being used as 
evidence of a scary deterioration in Social Security's finances. That's 
just wrong. The two monster numbers are actually the same quantity - 
different ways of expressing an unchanging level of debt at two different 
points in time. If you owe someone $1,000 in 10 years, for instance, you 
could retire the debt now with $500, or next year with $530. Your level of 
debt doesn't change, just the time point.

Some people who interpret the numbers as a deterioration appear to be 
confused. But others, like President Bush, are being deliberately alarmist. 
Mr. Bush's persistent misstatements on Social Security leave little doubt 
that he wants Americans to believe that the system is irretrievably broken 
so that they will buy into his unnecessary privatization plan.

Fortunately, the unpoliticized numbers in yesterday's report are not overly 
dire. Using a 75-year time horizon, the trustees project that the system 
will be able to pay full benefits until 2041, at which time it will be able 
to pay 74 percent of the promised benefits, falling to 68 percent by 2079. 
That works out to a gap of $4 trillion, which could be bridged with modest 
tax increases and benefit cuts, phased in over the next few decades. If 
people try to tell you different, they need to be set straight.

http://www.nytimes.com/2005/03/24/opinion/24thu3.html