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Thursday, January 20, 2005

Social Security

I normally don't post about federal issues, but since a Minnesota Congresscritter is gunning for first place in the distorting reality contest, I thought I'd make a cursory comment.

So the question of the day is, "Is this a crisis?" Let's put this into an argument we can relate to. Suppose you saw your future salary in a crystal ball. Let's say that your salary was guaranteed to go up each year by an amount higher than the median growth in wages, high enough to take productivity increases into account. Suppose these increases were guaranteed for about the next forty years, after which you will receive guaranteed 75% of your highest salary.

Is that a crisis? For many people who have seen their wages stagnate for the past few years, this sounds like a great deal. For other, it may be unappetizing, or inconvenient, but it's certainly nowhere near the end of the world, especially if you saw that in your crystal ball and made some small changes to adjust.

Listen, folks: benefits going to zero in five years and staying there for all perpetuity is a crisis. The state of Social Security is not. A good way to push it closer towards a crisis would be private accounts, which would be more expensive than leaving SS completely alone until 2061.

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