Fact-checking Bush on Social Security
President exaggerates problems in retirement system

By Rex Nutting, CBS.MarketWatch.com
Jan. 11, 2005

WASHINGTON (CBS.MW) - President Bush made several factual errors Tuesday about Social Security's long-term financing problems at a photo op event designed to educate the public about the retirement system.

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Bush vs. facts

·         Bush: "As a matter of fact, by the time today's workers who are in their mid-20s begin to retire, the system will be bankrupt. So if you're 20 years old, in your mid-20s, and you're beginning to work, I want you to think about a Social Security system that will be flat bust, bankrupt, unless the United States Congress has got the willingness to act now."

The facts: The Social Security system cannot go "bankrupt," for it has no creditors. By law, the trustees will continue to pay reduced benefits even if the trust fund is exhausted. Payroll taxes will continue to come in and benefits will continue to be paid.

According to the trustees' intermediate economic forecast (neither doom nor boom), the trust fund will be able to pay about 73 percent of scheduled benefits in 2042 and about 68 percent of scheduled benefits in 2078.

Future presidents and Congresses could also choose to fully fund scheduled retirement benefits from general tax revenue.

·         Bush: "Most younger people in America think they'll never see a dime."

The facts: Social Security says younger people will see a lot more than a dime. Their retirement benefits - even under a "flat-bust" system -- will be significantly higher than today's benefits in real terms.

For low-income Americans, currently scheduled benefits for those who retire in 2080 are $19,906 per year in 2004 dollars. If Social Security can pay only 68 percent of those benefits, that would be $13,536 per year, compared with benefits of $8,804 for low-income retirees who retired last year.

For the highest earners, Social Security is currently promising $53,411 per year for those who retire in 2080 (or $36,319 per year if Social Security can pay only 68 percent). Current maximum benefits are $21,891 per year for those who retired last year.

·         Bush: "In the year 2018, in order to take care of baby boomers like me and -- (laughter) -- some others I see out there -- (laughter) -- the money going out is going to exceed the money coming in."

The facts: According to the SSA, costs are projected to exceed income, including tax revenues and interest income from the trust funds' bonds, starting in 2028, not 2018. The 2018 date is when tax revenues alone no longer meet costs; workers have been paying extra taxes since 1983 to build up the trust funds' assets for just this eventuality.

·         Bush: "The problem is, is that times have changed since 1935. Then, most women did not work outside the house, and the average life expectancy was about 60 years old -- which for a guy 58 years old, must have been a little discouraging. Today, Americans, fortunately, are living longer and longer. I mean, we're living way beyond 60 years old, and most women are working outside the house. Things have shifted."

The facts: According to the SSA, the life expectancy for a 65-year-old man in 1940 was 76.9 years. Today, a man aged 65 can be expected to live to 81. Most of the increase in life expectancy in the past half century has been for infants, not for the elderly.

The increase in the percentage of women working outside the home has boosted Social Security's resources, rather than depleted them. Today, many women who worked receive a widow's pension rather than their own earned benefits. All the payroll taxes they ing someone else's retirement.

Rex Nutting is Washington bureau chief of CBS.MarketWatch.com. 

The article can be found at CBS MarketWatch, but you will probably be required to register for free access.  Go to Economy & Politics->Politics and Legislation and look under the article heading “Social Security’s Debt Impact” for a subtitle of “Plus: Bush vs. facts”.  In any case, nearly the whole article has been posted above.

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A synopsis of this article with additional information can be accessed directly at the Daily Howler...

NUTTING GETS IT RIGHT! Amazing! One reporter penned the piece which should have been in every paper:

SATURDAY, JANUARY 15, 2005

NUTTING GETS IT RIGHT: Omigod–somebody did it! Somebody wrote the “fact check” report which should have appeared in every newspaper after Bush’s performance last Tuesday. “Bush exaggerates a few facts about Social Security,” said the headline–a headline which was excessively polite. But Rex Nutting actually spotted the news which came from Bush’s ballyhooed forum. Readers, when an American president convenes a big forum and proceeds to lie in the public’s face, that’s the biggest news story that day! As far as we know, only Nutting, among major scribes, bothered to sit down and write it.

...

Okay, the point is, as we all know, there is no "crisis"; it's a deliberate distortion (read: lie) in an attempt to mislead the American public to obtain support for Bush's misguided attempt to dismantle Social Security.  There is no problem until 2048 (or even 2058 by another estimate), and even those estimates are "conservative"--based on gloomy projections of the performance of the economy!  Even then, benefits are merely reduced and could be entirely compensated for by applying no more money (from the General Fund) than we're currently spending on 'war'.

We can, and should, visit some attention on reducing program costs and adjusting the payroll tax in a modest way; which would extinguish even the mild funding problems that do exist.  We also need to realize that if we allow younger people to redirect some of their Social Security taxes into individual accounts, that represents a reduction in the planned revenue of the Social Security fund--and that very well could exacerbate the mild funding problem...

Recognize too, that to actually switch from the existing Social Security program to "individual accounts", will cost 2 trillion... well, actually, and this is important, that 2 trillion is just the  costs over the first decade... the second decade would require an additional 3 trillion, and 5 trillion the next decade and 5 trillion in the next after that!!!  Umm... while a trillion may not sound like much (?), a trillion here, a trillion there, and pretty soon it adds up to "real" money!  Sure, we could always abort the process in the middle... but how many trillion would that waste?  We just cannot let Bush monkey with this program (and somehow, we desperately need to restore taxation of the wealthy to reasonable levels since we cannot sustain the current deficit spending and resulting oppressive national debt--but that's another issue).