Saturday, February 19, 2005
Social Security Crisis - 2018 or 2042?
Charles Krauthammer thinks the Bush team is shooting itself in the foot by talking about the SS trust fund 'exhaustion in : 2042? He argues they should focusing on the real imminent 'crisis' date of 2018, when the FICA tax takes less in than is needed to pay benefits. Since there is no money in the trust fund, that date is when we must raise taxes or borrow money to pay those benefits. He makes a clear case why the so-called trust fund exhaustion date is meaningless in real money terms -- 2040, 2050, 2100 it's just a matter of setting different assumptions on the rate of interest for compounding the non-existent money in the trust fund. (5% of Zero = 3% of Zero = Zero; it just let's us all pretend there's not a problem till it's too late.)
Treasury Secretary Snow pushes for pesonal retirement accounts and focuses on 2018 as the SS crisis start date in his 18 February Statement on Social Security Reform , but he repeats the 'trust fund exhaustion in 2042' theme that Krauthammer finds both outrageously misleading and self-defeating. Is that a half way meeting of the minds on this? Expect to hear more about 2018.
Treasury Secretary Snow pushes for pesonal retirement accounts and focuses on 2018 as the SS crisis start date in his 18 February Statement on Social Security Reform , but he repeats the 'trust fund exhaustion in 2042' theme that Krauthammer finds both outrageously misleading and self-defeating. Is that a half way meeting of the minds on this? Expect to hear more about 2018.
