Social Security is one of the great government success stories of our time.
It has lifted more disabled and elderly Americans out of poverty than all other social programs combined.
If not for its guaranteed benefits, more than half the elderly would drop below the poverty line, according to the Center on Budget and Policy Priorities.
But in his State of the Union address President Bush said, "By the year 2042, the entire system will be exhausted and bankrupt."
He was referring to Social Security trustees' prediction that the trust fund will run out of money in 2042. (The nonpartisan Congressional Budget Office predicts 2052, but let's stick with the 2042 estimate.)
What does that mean and how do they predict that? Learn the answers, and you'll wonder what the fuss is all about.
First of all, what they say will happen in 2042 is that the trust fund will no longer be able to pay 100 percent of benefits. After that, it could still afford about 70 percent of promised benefits because money continues to flow into the system from the current workforce. This program has never missed a payment in more than 60 years, and it will not simply stop issuing checks in 2042.
But how did they come up with that date? To do so, Social Security trustees must predict the nation's economic growth. They have three scenarios - pessimistic, intermediate and optimistic - and use the intermediate one to arrive at 2042.
But this scenario assumes U.S. economic growth will drop to unprecedented levels, averaging only 1.9 percent a year over the next 75 years, even though it averaged 3.4 percent for the past 75 years. This is intermediate? Why the doom-and-gloom prediction?
Trustees would answer that they have a fiduciary responsibility to make extremely conservative assumptions, and because U.S. population growth is slowing, that could translate into fewer people producing and buying.
In contrast, President Bush is under no such obligation to be responsible with his economic predictions when promoting his plan to partially privatize Social Security. His rosy scenario of how much money we would earn in the stock market - to offset the benefit cuts his plan will require - assumes stock market returns of 6.5 to 7 percent above inflation for the next 75 years, an estimation that would require unprecedented gains in economic growth.
As prize-winning economist and New York Times columnist Paul Krugman explains: "Any growth projection that would permit the stock returns the privatizers need to make their schemes work would put Social Security solidly in the black."
But let's take the fiduciarily responsible road less traveled by the Bush administration, and apply the Social Security trustees' "optimistic" scenario (if you can call it that). It assumes that U.S. economic growth will decrease, but to an average 2.2 percent over the next 75 years - still far below the 3.4 percent rate of the past 75 years. Under this scenario, the trust fund pays full benefits at least through the next 75 years (they won't make projections beyond that).
Each year that goes by without the doom-and-gloom economic slowdown assumed by trustees extends the Social Security trust fund's "bankruptcy" date, as the president puts it. In 1998, trustees predicted that date would be 2032. Despite a recession since that prediction, the trust fund's estimated life has been extended by 10 years over that six-year period.
Clearly, there is no "crisis" as President Bush wants to scare Americans into believing. There is a manageable problem. It certainly does not require dismantling the most successful social program in U.S. history by privatizing it.
Rick Bender is president of the Washington State Labor Council, AFL-CIO, the largest labor organization in the state.
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