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Nov 16, 2007

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Dave Ribar

With all due respect to Krugman and others, we are facing two problems with respect to Social Security. The first problem is that we've effectively already spent the trust fund that is supposed to help support the program. Since the 1983 reforms, we've run deficits nearly every year--even when the trust fund revenues were included as revenues. So the federal deficits have actually been much larger than we've been led to believe, because much of that money was supposed to be put aside. Net revenues going into the trust fund are diminishing and will turn to net draws by around 2017. This means that greater and greater amounts of general revenues will need to be collected and spent. To give some idea of the size of these figures, consider that this year our net deficit really is about twice as large as it's reported because it does not account for about $190 billion in net revenues flowing into the trust fund. In 10 years, that $190 billion "cushion" will be gone.

The second problem is that the trust fund itself won't continue to provide a sufficient supplement to keep Social Security fully funded at the current tax rates and benefit levels. The estimate is that the trust fund will be exhausted in another 34 years. Once that happens, the current tax structure will only be sufficient to pay about 3/4 of the currently projected benefit structure.

So essentially, the cost of "doing nothing" is that sometime between now and 2041 we would have to cut the program by 25 percent. The cuts occur sooner if we are not willing to make up the money that we should have saved in the trust fund or around 2041 if we are willing to make up that money. Modest reforms now could eliminate the need for much larger cuts later.

Krugman and the others are right that there are bigger entitlement issues. Health care is the biggest. However, the Social Security problem is large in its own right (a several trillion dollar problem).

Ed Cone

Isn't much of the problem with raiding SS to fund other things? Atrios: "Someone had an idea for a lockbox, but the Village Elders decided that was a very silly idea."

Acknowledging that doesn't undo the damage, of course, but it does give some perspective to the arguments.

As I wrote in the column linked above: "the idea of fixing it before it breaks is a good one...Complex systems require dynamic management, and there are a lot of moving parts here."

Brenda Bowers

Edward you are to be applauded! I don't agree with much of what you have said above and have very sound arguments to prove you wrong, but I won't go there today. At least not on your site, but maybe on my own. BUT, I am so happy to see you actually stepping up to the plate and blogging a few of your own views rather than the rather than the silly "hey look at me folks I can read"cut ands past and hiding behind someone else's words that is your usual mode.

I hope this is the beginning of something much better for your blog. You have an excellent brain and it is a good thing to see you attempting to use it. Sincerely, Brenda

Dave Ribar

Ed:

Raiding the trust fund is a big part of the problem and one of the reasons for writing that the system might have serious issues before 2041.

Private accounts are actually one way to address that issue. Instead of building up a "raidable" trust fund, put any new money someplace that would be harder for the government to reach.

Ed Cone

BB, I don't share your aversion to link-and-comment blogging, or hub/portal blogging. It's one of the most venerable uses of the medium, it's a great way to start conversations, and it is a useful way of pushing local stories to broader audiences and bringing national/international stories to our depth-deprived local media scene. I think there's an art -- or at least a skill - to it, as well.

That said, I would probably write more and longer pieces of my own at this blog if I did not spend most of my time writing such pieces for a living (you can see some of my more blog-like pieces by clicking on the "N&R columns" link to the right). I need to keep working for a living for a while to come, so major changes in the format of this blog seem unlikely.

DR, we seem to agree that locking up the assets is a good idea. As I wrote in that same January 2005 column, though: Private investment accounts that allow people to buy stocks seem to be the way Bush is headed, with the idea being that the market will yield larger payoffs over time than the current system. But by the time you pay brokerage fees and the government borrows the money (we're talking trillions with a "t") to cover what gets pulled out of the current system, you've offset projected gains and added risk to what is meant to be a guaranteed program. Social Security should provide the solid base of the asset pyramid, not the investment capital at the top.

I do think the markets may offer long-term growth that could help Social Security remain solvent and healthy, but the answer isn't converting it into private 401(k) plans. One solution could be putting some money into index funds that track the broad equity market and charge minimal fees. That would avoid the potential problem of direct government ownership of particular stocks and help keep costs under control. I'd also like to see the tax code make it easier for people to save money on their own.

Brenda Bowers

I am not opposed to cut and paste at all, I just think other's articles should be briefly mentioned and/or even briefly quoted, and then used as a jump off point to make your own comments, and not just to show off what you personally have been reading.

Personally, I give the Greensboro bloggers a lot more credit for intelligence and having broad interests than you do if you think you need to point out reading matter to them. True many of them are rather insular in their reading as well as their living, but these people don't as a rule read yours or any of the other more thoughtful blogs. I believe the "discussions" that you seem so proud of fomenting are just that: fomenting. People come here to see what the fray is about today and not to discuss the post. Just read the discussions (tongue in cheek here) you speak of and you will find far more intelligent debate over on "Leave me alone I'm digging" blog.

If time is your problem and reason for failing to post the kinds of posts you are capable of, then perhaps you should try for quality rather than quantity. Lord knows you can not be any more critically pressed for time than Joe and yet you see what he is doing. His is without a doubt the very best on the G'boro blogosphere. And you will notice his numbers are way up there and he seldom stretches himself to produce more than one a day. If it is recognition you want you could very well follow his example. He is also not at all afraid of controversial issues and this generates debate. He is also very well rounded in his choice of subject matter.

Just an old school marm trying to head what could be a star pupil in the right direction. Don't mean any harm and certainly do mean good. You see, I hate to see intelligence wasted. It's like seeing a book handled carelessly.

Now I am leaving AGAIN. I keep promising myself not to come back here and then here I am again. It must be that school marm/star pupil thing because I sure as hell seldom agree with you and I certainly get no enjoyment out of sparring with you. Much love! Brenda BB

Ed Cone

I appreciate your comments, BB, and don't see the slightest hint of sparring -- just two people discussing their different tastes in blogs.

Coturnix

Nobody can read everything every day. But I check this blog every day because Ed looks at sources I do not. And when he picks a story to link to, I trust Ed's judgment as it is invariably worth reading what he links to. He saves me time. I also do a lot of linking, filtering content from my sources for people who trust my judgment. And when time permits, Ed writes a long piece worth reading. And I try to do the same - no guarantee of quality but some people seem to like it. There is a value in a filter-blog when the blogger is a person whose judgment you can trust.

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