This Again?

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"This Again?"

Oy. Here comes The Washington Post lambasting Hillary Clinton for not proposing a plan to “fix” the solvency problem that Social Security will face, years from now, if a series of historically inaccurate projects turn out to be accurate, even while they say nothing about the Republican candidates who likewise have promoted no such solutions. Clinton’s position, that she’s not going to put anything on the table in the context of this political campaign, is eminently sensible. Nor, the phasing-out of the program itself aside, should one really rule anything out. The Post even includes bonus inaccuracy:

Because Social Security increases are pegged to wages, rather than inflation, economic growth alone won’t solve the problem. Fiscal responsibility first is fine; fiscal responsibility only is an irresponsible dodge, as Ms. Clinton well knows.

This is just wrong. Social Security benefit increases are, indeed, partially tied to wage rates but it’s still true that the faster the economy grows the more affordable promised benefits become. Indeed, that’s the basic premise of pay-as-you-go financing of social insurance schemes. The relatively poor present borrows from the relatively rich future. All the Post would need to do is to look back at past SSA Trustees’ Reports and they would see that when the economy grows faster, the outlook for Social Security’s finances gets bigger. They would also see that if the SSA updated its projections of likely future productivity growth to reflect the post-1995 return to pre-1973 levels of high productivity growth, that the alleged financial problems would substantially diminish.

It may (or may not) turn out that, in fact, the economy does not grow fast enough to close the financing gap. But this isn’t a logical fact about the nature of the program, it’s a contingent hypothesis that the Post seems to be subscribing to even though its editorial writers don’t appear to understand what the hypothesis is or how Social Security works.

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