“A Question of Numbers,” by Roger Lowenstein, New York Times, http://www.nytimes.com/2005/01/16/magazine/16SOCIAL.html, 16 January 2005 (from slashdot).
“Political Divisions Persist After Election: Nation Unsure, Hopeful About Bush, Poll Finds,” by Richard Morin and Dan Balz, Washington Post, http://www.washingtonpost.com/wp-dyn/articles/A16073-2005Jan17.html, 18 January 2005 (from The Corner).
Amid the New York Times’ dishonesty
The C.B.O. assumes that the typical worker would invest half of his allocation in stocks and the rest in bonds. The C.B.O. projects the average return, after inflation and expenses, at 4.9 percent. This compares with the 6 percent rate (about 3.5 percent after inflation) that the trust fund is earning now.
The “trust fund”‘s 3.5 percent return is meaningless. Nyt is conflating two different types of returns. In the second sentence the CBO projection of an average adjusted 4.9% return is for a “typical worker.” The 3.5% adjusted return is for the trust fund as a whole. It ignores the effective return of a typical worker under the current social security return.
The number of workers per retiree has been steadily decreasing over the long haul, while the years worked before receiving benefits has been increasing (every modern worker will have paid into SS for his entire working life, while the first social security beneficiary worked only three years before collecting). So while the lock-box’s adjusted return has been relatively steady, each worker’s return has fallen from many tens of thousands percent to much, much less.
But Nyt’s faces an uphill battle in its propaganda
At a time when Democratic leaders are preparing to challenge many of Bush’s major initiatives, nearly seven in 10 Americans agree that Bush’s victory means that congressional Democrats should compromise with him — even if it means compromising on their party’s principles.
But by 54 percent to 41 percent, the public supported a plan that would include a reduction in the rate of growth of guaranteed benefits and private savings accounts financed with a portion of payroll taxes. A proposal with those elements is under consideration by the Bush administration.
Americans divide equally over Bush’s proposal to index Social Security benefits for future retirees to increases in the cost of living rather than to wage growth as is now the case, a change that would effectively mean benefits would be lower than currently projected. A clear majority of Americans — 55 percent — support the president’s proposal to allow younger workers to put some of their Social Security savings into stocks or bonds. When packaged together, the two components draw the support of 54 percent of those surveyed.
The survey suggests that Democratic leaders may be out of step with their rank and file on the severity of the problems facing Social Security. Those leaders are attempting to thwart Bush’s plans by saying there is no immediate crisis. But two-thirds of all Democrats said they worry that there is not enough money to keep Social Security funded until they retire.
Depending on how the question is asked, polls can give different results. And I believe President Bush is not inclined to follow popular opinion much, in any case. But it’s heartening to see that even with a formerly reputable paper like Nyt abandoning honesty, the President can, at least for now, count popular opinion as a friend.