----- Original Message ----- From: "Nick Arnett" <[EMAIL PROTECTED]> To: "Killer Bs Discussion" <[email protected]> Sent: Sunday, February 20, 2005 12:16 PM Subject: Re: What Social Security (and Its "Reform") Say About America
> > Anybody else want to offer reasons why the current level of Social Security is the right one? > Sure, but before I do that, I need to note something. Only in a very limited sense are we talking about maintaining the same level of funding. The proposal is to keep total SS payments in the long term at, roughly, the same % of GDP as the present SS tax income is. This is significantly higher % of GDP than the present outlays (close to a factor of 2 difference from calculating SS as a % of GDP and SS tax as a % of GDP). So, given this goal, SS payments as a % of GDP will keep on growing until the baby boomers hit retirement, and then, I think, fall slightly to almost twice what they are now. With GDP growth, the total money going to each retiree will be a lot more in inflation adjusted dollars (if past history is any indication, the per capita growth in GDP should be >= 50% by 2050). But, since people are expected to live longer, if we increase SS payments so the yearly payout matches GDP, we will have to significantly increase the fraction of GDP going to SS. With my suggestion, between now and, roughly, 2050, the averaged real increase in initial SS benefits would be 1%. Without any changes, it would be 1.5%. I suggested a highly progressive means of doing this. As I said elsewhere, political realities might require a less progressive solution. Now, finally, to answer your question. The reason I think that 6.5% of GDP is a reasonable number for SS is based in the nature of the SS tax and benefits. SS taxes workers to pay retirees. While there are exceptions, of course, most of the SS tax is paid by people 18-64, while almost all of SS retirement payments are sent to people >=65. Since poverty in the 18-64 age cohorts is slightly higher than it is in the 65+ age group, it makes sense that we've reached the right balance for income transfer from the 18-64 age group to the 65+ age group. Dan M. _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
