Thursday, February 03, 2005

BEE IS DISHONEST ABOUT SOCIAL SECURITY

The Bee's lead editorial on February 2 titled "A dead horse" is a firm stance against Bush's social security reform. This much was predictable. You would expect that an editorial that contains the subtitle "Bush plan would ruin Social Security" would contain some facts to prop up its conclusion. No so. In fact, the Bee flatly lies about Bush's reform plan and uses hyperbole in describing the effects of Bush's reform.

First, the Bee describes Bush's plan to put a very small percentage of taxes into personal investment accounts as "radical." Let's take a look at how "radical" this plan is.

Beginning in 2009, workers could invest up to 4 percent of their wages in individual investment accounts up to $1,000 annually. The maximum contribution would rise by $100 a year afterward. No withdrawals would be permitted before retirement. Wow! Radical. Except that it isn't. The federal government already does this with federal employees in what's called the Thrift Savings Plan. The National Center for Policy Analysis drafted a report on how the social security system can be changed to something similar to the Thrift Savings Plan.

The Bee accuses Bush of making "grossly exaggerated" claims about the financial stability of social security to justify his reforms. The Bee does not bother to explain to the reader the claims it believes Bush has exaggerated.

Although not intended, the Bee makes a humorous statement that "Social Security faces a long-term actuarial imbalance." Got that: an "actuarial imbalance."

This is the nature of the "actuarial imbalance": In 2018, there will no longer be enough money coming in from social security taxes from working people to pay the amount the government pays in social security benefits. In other words, in 2018 the government will have to find some other source of revenue to pay the benefits it has promised. It can do this by raising taxes or through cuts in government spending. The Bee glosses over this fact and simply states that in 2041 the income from taxes will only cover about 78% of the promised benefits. The Bee is being intellectually dishonest when it implies that the problem starts in 2041. The problem hits home in 2018 when the government will start to require sources of revenue other than social security taxes to pay benefits!

Hell bent on minimizing the problem (true to the Democrat playbook that there is no social security crisis), the Bee states that "Congress can easily make adjustments to fix that imbalance." What adjustments you ask. Well, the Bee does not suggest any. What it means is that Congress can cut benefits, raise taxes, or strip away funding from other government programs and shift the money to pay benefits. Which one does the Bee endorse? Well, who knows. But according to the Bee, the problem is "easily" solved. A solution does not lie in any of these choices because worker demographics dictate that the system of relying on a decreasing number of workers to support an increasing number of retired persons.

The Bee then goes on to state that during the 20th century "there were three 20-year periods of negative real returns on the stock market - 1901 to 1921, 1928 to 1948 and from 1962 to 1982." The Bee does not indicate the source of this "fact," but the chances are they are referring to a 1997 by economist John Mueller. The Bee should have done more research than reading the daily talking points faxed to it from the Dems. John Mueller's 1997 report has been dedunked by numerous economists and policy experts. See also here and here. I should add that Mueller's report was commissioned by the National Committee to Preserve Social Security and Medicare . . . . oh, the Bee didn't mention that did they? Ethical lapse?

Let's get down to what the Bee is against: individual choice. Sounds good if it pertains to abortions, but people cannot be trusted to plan for their own future.

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