Is this what he meant by “fuzzy math?”
President Bush used much of Tuesday night’s State of the Union address to champion his Social Security privatization plan. The President repeated his past claims that by 2042 the system would be "exhausted and bankrupt".
As we have reported in the past, the truth is that the Congressional Budget Office says Social Security can pay out the current full benefit rates until 2052 (2042 if you use the Social Security Administration’s numbers) and 80% of the current rates thereafter. It seems as though we have a bit of a discrepancy.
The hope of privatization supporters is to scare the public, particularly young Americans, into fearing that if something is not drastically changed, our generation will grow old in poverty. Its a lot easier to talk people into giving something up if they don't think they're going to get it in the first place.
That's why we think its so important for you to understand the real financial situation. Anyone who really thinks they are going to get to get nothing out of Social Security is going to get ripped off! The politicians are running a game on you.
There are good questions regarding how much of a change is needed. But first, it may be best to pose the question of whether the Bush plan, drastic as it may be, will improve or harm our generation’s future. Let us examine.
Social Security Administration numbers crunchers estimate that under the Bush plan, Social Security benefits will drop to 20% of pre-retirement earnings by 2075 – that number is 42% today. That means your basic guarantee only covers 20% of what you earned while you were working. And it continues to fall after that.
The Bush plan would tie benefits to prices rather than to wages as the current system does. Since wages rise faster than prices (creating a continued rise in standard of living), this would result in a relatively decreased standard of living for our generation when we retire, and for every succeeding generation.
Proponents argue that private investment will yield greater returns than public insurance. Yet, the privatized pension system in Chile, which the Bush administration holds up as a model, has left many of its participants in worse economic positions than they would have been with a traditional social security-type system. The best you can say about it is that its a gamble.
The Bush Administration would like the equation to be this simple: An uncertain future for Social Security equals need for change. Private is better than public.
But if it were that simple, MIT would offer a course in Fuzzy Math.
-Miles Granderson
As we have reported in the past, the truth is that the Congressional Budget Office says Social Security can pay out the current full benefit rates until 2052 (2042 if you use the Social Security Administration’s numbers) and 80% of the current rates thereafter. It seems as though we have a bit of a discrepancy.
The hope of privatization supporters is to scare the public, particularly young Americans, into fearing that if something is not drastically changed, our generation will grow old in poverty. Its a lot easier to talk people into giving something up if they don't think they're going to get it in the first place.
That's why we think its so important for you to understand the real financial situation. Anyone who really thinks they are going to get to get nothing out of Social Security is going to get ripped off! The politicians are running a game on you.
There are good questions regarding how much of a change is needed. But first, it may be best to pose the question of whether the Bush plan, drastic as it may be, will improve or harm our generation’s future. Let us examine.
Social Security Administration numbers crunchers estimate that under the Bush plan, Social Security benefits will drop to 20% of pre-retirement earnings by 2075 – that number is 42% today. That means your basic guarantee only covers 20% of what you earned while you were working. And it continues to fall after that.
The Bush plan would tie benefits to prices rather than to wages as the current system does. Since wages rise faster than prices (creating a continued rise in standard of living), this would result in a relatively decreased standard of living for our generation when we retire, and for every succeeding generation.
Proponents argue that private investment will yield greater returns than public insurance. Yet, the privatized pension system in Chile, which the Bush administration holds up as a model, has left many of its participants in worse economic positions than they would have been with a traditional social security-type system. The best you can say about it is that its a gamble.
The Bush Administration would like the equation to be this simple: An uncertain future for Social Security equals need for change. Private is better than public.
But if it were that simple, MIT would offer a course in Fuzzy Math.
-Miles Granderson
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