WILLisms.com: Social Security Reform Thursday: Week Sixty-Four -- Contingencies & Solutions.

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Social Security Reform Thursday: Week Sixty-Four -- Contingencies & Solutions.

Thursdays are good days for reform, because they fall between Wednesdays and Fridays. And reform is a long-haul process, not a fleeting event. So we're going to keep plugging along with the case for reform, even as the issue goes off the political radar screen.

That's why WILLisms.com offers a chart or graph, every Thursday, pertinent to Social Security reform.

This week's topic:

Social Security Reform Solutions.

Some interesting graphs, courtesy of Social Security administrator James B. Lockhart III and the American Academy of Actuaries.

First, the meltdown target date, which could be as soon as 2030 or as far away as 2064. Likely, though, the date will be closer to 2041:

However, there's a solution. And it's not "raise taxes and raise the retirement age." The solution is a modernized Social Security system. The solution is protected personal retirement accounts:

The bottom (red) line of today's unchanged program is clearly negative and unsustainable. The two other alternatives are typical reform proposals. They both require about $500 billion (net present value) in general revenue transfers but produce strikingly different results in the long term.
A 1983-style reform of increasing payroll taxes 1 percent and increasing the retirement age over time to 70 (green line) would be less negative that today's system but still not sustainable. On the other hand, a package that indexed future benefit growth to inflation rather than wages and incorporated personal accounts (blue line) would be more negative at first but would then become positive and reach sustainable solvency.

So, intelligent reform of Social Security would yield better benefits, and bring the program into long-term solvency. It's a win-win.

The good news is that, as the National Association of Manufacturers blog points out, more than 160 candidates on both sides of the aisle are coming around to the necessity of reform and signing the non-partisan For Our Grandchildren pledge (which you can download here in .pdf format).

It's time for all 435 members of Congress, and all 100 Senators, to sign this pledge. It's time for vulnerable Republicans (electorally-speaking) to stop being so defensive/evasive about Social Security reform. It's time for Democrats to stop scaring old people and stymieing reform entirely. It's time for solutions, not kicking the can down the road.

It's time for reform.

The clock is still ticking:

Tune into WILLisms.com each Thursday for more important graphical data supporting Social Security reform.

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Previous Reform Thursday graphics can be seen here:

-Week One (Costs Exceed Revenues).
-Week Two (Social Security Can't Pay Promised Benefits).
-Week Three (Americans Getting Older).
-Week Three, bonus (The Templeton Curve).
-Week Four (Fewer Workers, More Retirees).
-Week Five (History of Payroll Tax Base Increases).
-Week Six (Seniors Living Longer).
-Week Six, bonus (Less Workers, More Beneficiaries).
-Week Seven (History of Payroll Tax Increases).
-Week Seven, bonus (Personal Accounts Do Achieve Solvency).
-Week Eight (Forty Year Trend Of Increasing Mandatory Spending).
-Week Nine (Diminishing Benefits Sans Reform).
-Week Ten (Elderly Dependence On Social Security).
-Week Eleven (Entitlement Spending Eating The Budget).
-Week Twelve (Benefit Comparison, Bush's Plan versus No Plan).
-Week Thirteen (Younger Americans and Lifecycle Funds).
-Week Fourteen (The Thrift Savings Plan).
-Week Fifteen (Understanding Progressive Indexing).
-Week Sixteen (The Graying of America).
-Week Seventeen (Debunking Myths).
-Week Eighteen (Debunking Myths).
-Week Nineteen (Reform Needed Sooner Rather Than Later).
-Week Twenty (Global Success With Personal Accounts).
-Week Twenty-One (GROW Accounts: Stopping The Raid).
-Week Twenty-Two (Millions of Lockboxes).
-Week Twenty-Three (Support for Ryan-DeMint).
-Week Twenty-Four (KidSave Accounts).
-Week Twenty-Five (Latinos and Social Security).
-Week Twenty-Six (AmeriSave).
-Week Twenty-Seven (Cost Of Doing Nothing).
-Week Twenty-Eight (Chile).
-Week Twenty-Nine (Entitlement Spending Out Of Control).
-Week Thirty (Reform Better Deal Than Status Quo).
-Week Thirty-One (Social Security As A Labor Cost).
-Week Thirty-Two (Social Security And Dependence On Government).
-Week Thirty-Three (Social Security, Currently A Bad Deal For African-Americans).
-Week Thirty-Four (Longer Life Expectancies Straining Social Security).
-Week Thirty-Five (Howard Dean & Salami).
-Week Thirty-Six (Growing Numbers of Beneficiaries Draining Social Security).
-Week Thirty-Seven (The Crisis Is Now).
-Week Thirty-Eight (Disability Benefits).
-Week Thirty-Nine (Broken Benefit Calculation Formula).
-Week Forty (German Social Security Disaster).
-Week Forty-One (Crumbling Pyramid Scheme).
-Week Forty-Two (Overpromising, Globally).
-Week Forty-Three (Demographic Wave).
-Week Forty-Four (The Jerk Store).
-Week Forty-Five (Defined Benefit Plans).
-Week Forty-Six (Even The Empty Promises Are A Bad Deal).
-Week Forty-Seven (Our Aging Population).
-Week Forty-Eight (The Tax Increases Required To Cover Social Security's Costs).
-Week Forty-Nine (Much Longer To Get Your Money Back From Social Security).
-Week Fifty (A Vote, At Last).
-Week Fifty-One (We Can Do Better).
-Week Fifty-Two (Socialist Security).
-Week Fifty-Three (China Has The Same Problem, Only Worse).
-Week Fifty-Four (Potential Crisis Size).
-Week Fifty-Five (The Crisis Moves Closer).
-Week Fifty-Six (Big Brother Social Security).
-Week Fifty-Seven (Personal Accounts Are Awesome).
-Week Fifty-Eight (Private Accounts and Presidential Proposals).
-Week Fifty-Nine (The False Promises Of Social Security = Unwise Investing/Saving).
-Week Sixty (Declining Rate Of Return).
-Week Sixty-One (Entitlement Spending Threatens America's Defense Capabilities).
-Week Sixty-Two (Dismal Rates Of Return Only Getting Worse).
-Week Sixty-Three (Lost Time, Growing Shortfall).

Posted by Will Franklin · 26 October 2006 05:22 PM

Comments

Right you are Will! It's time for all Members of Congress to sign the For Our Grandchildren Pledge. And I hope that you and your readers will encourage them to do so by signing the For Our Grandchildren Challenge to Congress at:
http://ga1.org/campaign/congress

And while you're at it, check out the transcript of Jim Angle's GREAT story about the FOG Pledge that appeared tonight on Brit Hume's Special Report.http://forourgrandchildren.typepad.com/blog/

Maybe next Thursday you can create a chart from the video clip!!

Posted by: Heidib at October 26, 2006 08:32 PM

Will, thanks so much for your continued documentation of the issues facing Social Security.

I know I've posted some of the information below before, but it really bears repeating in light of the commitment by so many congressional candidates this week to fix Social Security.

All of the following figures can be verified by consulting the Trustees' reports at http://www.ssa.gov/OACT/TR/TR06/index.html.

-- The current Soc Sec shortfall is now $13.4 Trillion. That's up from $10.5 T just three years ago. Most of the increase is simply because of the loss of time.
-- Despite wishful thinking by some, this problem isn't going away. 2017 is the date that costs are projected to exceed incoming revenues. Thereafter the deficits just get bigger and bigger -- more than $200 B a year (in today's dollars) by 2027. Even if all the demographic and economic projections break in a low-cost direction, the 2017 date barely recedes -- a 10% chance of moving out even as late as 2020, only 2.5% of moving out as far as 2022.
-- The current 75-year shortfall is already much bigger than that the Greenspan Commission faced in a crisis atmosphere in 1981-83.
-- The projection of 2017 as the crunch date happens to be the same as in the 1991 report. Just think how much better off we'd be if public servants had heeded that warning. Now with 15 years of additional retirements under the current, unsustainable path, it will be much harder to craft a solution that fairly works. And with each succeeding year it gets much harder.

Leadership means addressing problems before they become intractable crises. It's time to get this done.

Posted by: Feverishb at October 27, 2006 06:30 AM