NPR's John Ydstie spoils a nice 3 part on SS by misleading on size of prob

[papau]

http://www.npr.org/templates/story/story.php?storyId=4509596
THIS IS THE 3 PART FROM NPR -Examining the 'Model Two' Social Security Plan - by John Ydstie Morning Edition, February 23, 2005 · A plan to shore up Social Security called "Model Two" would remove the existing link between retirement benefits and increases in the country's overall living standard. Instead of being based on wage increases, benefits would be tied to price inflation. Prices tend to rise more slowly than wages, so future payments also would rise more slowly...........Social Security Plan Combines Privatization, Income Cap Raise by John Ydstie ..Morning Edition, February 24, 2005 · A proposal that offers a long-term fix for Social Security involves reducing the annual cost-of-living adjustments that compensate retirees for inflation. The plan raises the cap on income subject to Social Security payroll taxes, and adds private accounts as ways to fill the funding gaps in the Social Security program......Proposals Aim to Shore Up Social Security Funding by John Ydstie ..Morning Edition, February 22, 2005 · In this first installment of a three-part series on Social Security, NPR's John Ydstie examines the system's shortfalls and possible ways to extend its long-term solvency. Among the remedies: raising the retirement age; raising the tax that workers and employers pay into the system; and mandating that all federal and state workers take part in the national retirement program.
BUT HE HAD TO SCREW IT UP WITH "INFINITE HORIZON" NUMBERS THAT ARE MEANINGLESS.
http://mediamatters.org/items/200502250001

NPR economics correspondent cited misleading Social Security stat that exaggerates size of revenue shortfall

National Public Radio (NPR) economics correspondent John Ydstie cited a misleading estimate of Social Security's long-term revenue shortfall over an "infinite horizon," even though the American Academy of Actuaries has called this figure "misleading." In a report on Social Security on the February 22 broadcast of NPR's Morning Edition, Ydstie explained: "Over the next 75 years, there's a $3.7 trillion gap between what the system has promised in benefits and the resources it will have. And, over an even longer time frame, that gap will rise to more than $10 trillion."

He then quoted former Bush administration Treasury official Kent Smetters, who also cited the misleading $10 trillion figure. Smetters, who served in 2001 on the President's Commission to Strengthen Social Security, noted that "Model 2," the second of three options that the commission proposed for reforming the system, "completely eliminates the $10.4 trillion imbalance in the Social Security system."

But this figure, which comes from the 2004 report of the Social Security trustees, is misleading, according to the American Academy of Actuaries, the country's leading association of insurance and demographics experts. The academy criticized the use of "infinite horizon" projections for Social Security in a December 19, 2003, letter to the Social Security trustees:

Before 2003, the annual Trustees Reports showed OASDI's actuarial deficit and, more recently, its unfunded obligations only on an open-group basis over the statutory 75-year valuation period. For the first time, in their 2003 Annual Report, the Trustees included OASDI's ... actuarial deficit and unfunded obligations on an open-group basis for an infinite time period.

The Social Insurance Committee disagrees with Recommendation M-6. Rather, the committee believes that the new measures of OASDI's unfunded obligations included in the 2003 report provide little if any useful information about the program's long-range finances and indeed are likely to mislead anyone lacking technical expertise in the demographic, economic and actuarial aspects of the program's finances into believing that the program is in far worse financial condition than is actually indicated.

Ydstie also failed to place the Social Security deficit in the context of other liabilities that the federal government has recently assumed. The Center on Budget and Policy Priorities has shown in the graph below that in terms of percentage of gross domestic product (GDP), the fiscal impact of other recent Bush administration initiatives dwarfs the long-term revenue shortfall of Social Security.

Shortfall or cost as a percent of GDP through 2078
In trillions of dollars through 2078a

Shortfall, Social Security Trust Fund (CBO est.) b 0.35% NA

Shortfall, Social Security Trust Fund (Trustees estimate) c 0.65%$3.7 trillion

Cost of the new Rx Drug Benefit (Trustees estimate) d 1.38% $8.1 trillion

Cost of the 2001/2003 tax cuts, if made permanent e 1.95% $11.1 trillion

Combined cost of Rx drugs and permanent tax cuts f 3.34% $19.2 trillion

NOTE Ratio: Rx drugs and tax cuts to Social Security shortfall
Between 5.1 and 9.5 to 1

Tax cuts for top 1 percent, if made permanent 0.52% $2.9 trillion
NOTE PERMANENT TAX CUTS FOR TOP 1% IS ABOUT EQUAL TO SS PROBLEM!

a. Measured in present value.
b. Source: Calculations from data supporting, Congressional Budget Office, Updated Long-Term Projections for Social Security, January 31, 2005. CBO’s data show that the 0.35-percent-of-GDP Social Security shortfall is equivalent to a $1.9 trillion shortfall. Because CBO uses GDP and discount rate assumptions that differ from those used by the Trustees, CBO’s $1.9 trillion estimate is not comparable to the Trustees’ $3.7 trillion estimate. However, CBO’s 0.35 percent-of-GDP figure is comparable to the Trustees’ 0.65 percent figure.
c. Source: Calculations from the Trustees’ report, 2004 Annual Report of the Old-Age and Survivors Insurance And Disability Insurance Trust Funds, page 59.
d. Source: 2004 Annual Report of the Boards of Trustees of the Federal Hospital Insurance And Federal Supplementary Medical Insurance Trust Funds, page 108. The figure represents the net federal cost of the drug benefit, i.e., the benefit payments minus premium payments from beneficiaries and “clawback” payments from states.
e. Source: Center on Budget and Policy Priorities. The estimate of the cost of the tax cuts — 1.95 percent of GDP — is based on cost estimates of the Joint Committee on Taxation for tax cuts enacted to date, and estimates issued by CBO for the cost of extending those tax cuts and adjusting the Alternative Minimum Tax for inflation. (See footnote 2.)
f. Numbers may not add due to rounding.

[Hissyspit]

1. I've noticed he's done that several time, I think... n/t

[papau]

2. I agree - it is like the GOP orders certain phrases to be included!

:-(