Social Security Fact Checks

Well, I missed the State of the Union address this week because we were in Baltimore picking up our wedding album. Here are some links from FactCheck.Org about the president’s proposed Social Security reforms. Bush’s State of the Union: Social Security “Bankruptcy?”, That term could give the wrong idea. Bush also makes private accounts sound like a sure thing, which they are not.

Bush left out any mention of what workers would have to give up to get those private acounts — a proportional reduction or offset in guaranteed Social Security retirement benefits. He also glossed over the fact that money in private accounts would be “owned” by workers only in a very limited sense — under strict conditions which the President referred to as “guidelines.”

The real problem is that at some point, and there’s less debate about this just the when, what Social Security has to pay out in benefits will be more than what it is receiving in tax receipts.

Furthermore, the President did not specify what he would do to fix the problem. He again urged creation of private Social Security accounts. But those would be of no help whatsoever in shoring up the system’s finances, as acknowledged earlier in the day by a senior Bush administration official who briefed reporters on condition of anonymity:
“Senior Administration Official:” So in a long-term sense, the personal accounts would have a net neutral effect on the fiscal situation of the Social Security and on the federal government. Does Social Security Really Face an $11 Trillion Deficit? Apparently, it can remain solvent for the next 75 years but that’s not what Bush and Cheney want you to think. They fool you by using an infinte future projection which is a time span that is in reality of little value for policymakers.

President Bush and Vice President Cheney have told audiences that Social Security faces an $11 trillion shortfall if nothing is done to fix the current system. But they fail to mention that this is over the course of the “infinite future.” Over the next 75 years — still practically a lifetime — the shortfall is projected to be $3.7 trillion.