According to Rex Nutting, the Washington bureau chief for CBS Market Watch, President Bush has some facts wrong regarding his current cause célebre. Nutting dissects several erroneous statements that Bush made at an event Tuesday about Social Security's long-term financing problems -- part of the administration's ongoing road show to convince the public that the system must be eviscerated, largely in favor of private investment accounts, in order to prevent a looming crisis.
"BUSH: 'As a matter of fact, by the time today's workers who are in their mid-20s begin to retire, the system will be bankrupt. So if you're 20 years old, in your mid-20s, and you're beginning to work, I want you to think about a Social Security system that will be flat bust, bankrupt, unless the United States Congress has got the willingness to act now.'
"The facts: The Social Security system cannot go 'bankrupt,' for it has no creditors. By law, the trustees will continue to pay reduced benefits even if the trust fund is exhausted. Payroll taxes will continue to come in and benefits will continue to be paid. According to the trustees' intermediate economic forecast (neither doom nor boom), the trust fund will be able to pay about 73 percent of scheduled benefits in 2042 and about 68 percent of scheduled benefits in 2078.
"BUSH: 'Most younger people in America think they'll never see a dime.'
"The facts: Social Security says younger people will see a lot more than a dime. Their retirement benefits -- even under a 'flat-bust' system -- will be significantly higher than today's benefits in real terms. For low-income Americans, currently scheduled benefits for those who retire in 2080 are $19,906 per year in 2004 dollars. If Social Security can pay only 68 percent of those benefits, that would be $13,536 per year, compared with benefits of $8,804 for low-income retirees who retired last year. For the highest earners, Social Security is currently promising $53,411 per year for those who retire in 2080 (or $36,319 per year if Social Security can pay only 68 percent). Current maximum benefits are $21,891 per year for those who retired last year."
Nutting also debunks Bush's spin regarding life expectancy rates and the many baby boomers who will purportedly be left out in the cold.
The Social Security Administration, Nutting notes, says the system's trust fund, financed by payroll taxes and interest payments, will probably be exhausted in 2042, requiring the government to reduce benefits by about a fourth or a third. The Congressional Budget Office projects that the fund will be exhausted by 2052. (You can read the SSA trustees report here, and the CBO analysis here.) No doubt a problem worthy of address -- though hardly the Titanic bearing down on an iceberg, as Team Bush would have us shudder to think.