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Author: jgc123 Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 63092  
Subject: Re: Happy Birthday Social Security Date: 8/15/2007 5:33 PM
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Well, it could be that we are overstating the problem in the first place. Here is the Wikipedia summary of the issues. For example, according to Krugman, the tax cuts for people making over more than $500,000 per year is approximately equal to the entire shortfall:

"Retirees and others who receive Social Security benefits have become an important bloc of voters in the United States. Indeed, Social Security has been called "the third rail of American politics" — meaning that any politician sparking fears about cuts in benefits by touching the program endangers his political career. Accordingly, advocates of major change in the system generally argue that drastic action is necessary because Social Security is facing a "crisis" — Bush described it as a "structural problem" [8] and then, in his weekly radio address of January 15, 2005, said that Social Security "is on the road to bankruptcy" [9]. In succeeding months, he pressed this theme even more forcefully, arguing in April that "without changes this young generation of workers will see a UFO before they see a Social Security check." [10]

"Not everyone agrees. The Center for Economic and Policy Research says that "Social Security is more financially sound today than it has been throughout most of its 69-year history" [11] and that Bush's statement should have no credibility [12]. Liberal economist Paul Krugman, deriding what he called "the hype about a Social Security crisis", writes:

"[T]here is a long-run financing problem.
But it's a problem of modest size. The [CBO] report finds that extending the life of the trust fund into the 22nd century, with no change in benefits, would require additional revenues equal to only 0.54 percent of G.D.P. That's less than 3 percent of federal spending — less than we're currently spending in Iraq. And it's only about one-quarter of the revenue lost each year because of President Bush's tax cuts — roughly equal to the fraction of those cuts that goes to people with incomes over $500,000 a year.
Given these numbers, it's not at all hard to come up with fiscal packages that would secure the retirement program, with no major changes, for generations to come. (from "Inventing a Crisis"[13] New York Times, Dec. 7, 2004)
Other critics allege that Bush is opposed to Social Security on ideological grounds, regarding it as a form of governmental redistribution of income, which libertarian ideologues strongly oppose. [14]

Still other critics focus on the quality of life issues associated with Social Security, claiming that while the system has provided for retiree pensions, their quality of life is much lower than it would be if the system were required to pay a fair rate of return. The party leadership on both sides of the aisle have chosen not to frame the debate in this manner, presumably because of the unpleasantness involved in arguing that current retirees would have a much higher quality of life if Social Security legislation mandated returns that were merely similar to the interest rate the U.S. government pays on its borrowings. [15]
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