Social Security: The Phony Crisis » (1)

Dean Baker and Mark Weisbrot are codirectors of the Center for Economic and Policy Research (www.cepr.net).

The debate over Social Security reform continues, but few participants ask one basic question: does Social Security really need to be reformed? This eloquent, sophisticated book smashes away the rhetoric of the Social Security "crisis" to answer with a resounding "no," offering a clear and compelling defense of a system that's not nearly as troubled as many would have us think.

Kirkus Reviews

What if the predicted collapse of Social Security is only doublespeak and all the Chicken Little economists' warnings just prodigious flummery? Social Security is truly healthy, say Drs. Baker and Weisbrot, both of Washington's Preamble Center. It simply doesn't need the dire purgatives the putative experts prescribe. There is no dispute about the figures, statistics, or projections cited by the prognosticators when they spy a shortfall along about 2034. But the authors challenge basic assumptions with vigor and intelligence. They question the methodology and even the intentions of those who would renounce the remarkable success of America's great social-insurance program. The advertised deficit in the Social Security fund over the next 75 years, they note, is based on a projected rate of growth that's less than half the last 75. Social Security bookkeeping should be isolated from that of Medicare (which is funded in large part by general revenues). The supposed overstatement of the consumer price index, discovered by experts with their own agendas, may be way off base after all. (At any rate, an adjustment of the CPI would clearly improve the dire predictions for all social programs.) The privatization of the national retirement system—promoted, naturally, by Wall Street—would wreak havoc, based as it is on clearly untenable assumptions over any reasonable period. Demographics show that intergenerational warriors promote a false, poisonous cause. All in all, say economists Baker and Weisbrot, it's not an honest debate. Let's talk about the real problems, they urge. The environment is inexorably deteriorating, the gap between rich and poor is widening, and the rising cost ofhealth care is of paramount concern for the future. So calm down, policy wonks. Let Grandma alone. Your own retirement will be fine if it you let Social Security alone. Its future is brighter than the pundits and politicos would have us believe. An absolutely relevant and important analysis, presented with force and clarity, that asks, basically, what kind of a nation we really are.

Foreword Acknowledgments
Chapter 1: Introduction
Social Security and Social Insurance The Politics of Non-Issues
Chapter 2: Social Security and its Critics
Social Security's Finances The Disappearing Trust Fund Demography as Destiny Unfunded Liabilities, Ponzi Schemes, and Other Rhetorical Devices
Chapter 3: Generating Phony Wars With Generational Accounting
How Generational Accounting Works How Generational Accounting Cooks the Books Discounting Our Children's Futures Will Education Really Impoverish Our Children?
If Health Care Costs Destroy the Economy, What Will Happen to Tax Rates?
What the Recount Shows How Will Our Children Really Fare?
Rising Incomes, Changing Demographics The Base Case What the Real Generational Accounts Show
Chapter 4: Entitlements for the Elderly: Medicare "Reform"
The Wrong Direction The Wrong Incentives Medicare and Health Care Reform
Chapter 5: The Debate Over the Consumer Price Index
What Difference Does 1.1 Percent Make?
The Boskin Arithmetic The Evidence for an Overstated CPI Substitution Bias Retail Outlet Substitution Bias Quality and New Goods Bias Sources of Understated Inflation in the CPI Inflation for Whom?
The Implications of an Overstated CPI The Boskin Commission's Failed Case
Chapter 6: The Glories of Privatization
A Happy Market, an Unhappy Economy Is There a Way to Beat 3.5 Percent?
The Returns From Privatization: Going Down From 3.5 Percent A Modicum of Privatization
Chapter 7: The Advisory Council and Other Fixes
Three Ideas From the Advisory Council Investing the Trust Fund Other Regressive Cuts Proposals for Means Testing Benefits A Worsening Problem?
The Way to Real Reform
Chapter 8: The Debate Over National Saving
An Economist's View of Saving How Saving Generates Investment Finding a Recipe For Higher Saving The Impact of Investment on Economic Growth Saving Will Not Make Us Rich
Chapter 9: Will the Age Wave Lift All Boats?
The Basic Features of the Future The State of the Nation's Health The Many Homes of the Future Benefits of the Information Boom Opportunities in Education The Future of Work The Downside to the Next Century Fix the Problems, not Social Security
Chapter 10: An Honest Debate
Appendix: The Feldstein-Samwick Plan References