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February 24, 2016 at 09:24 AM
Like him or not, Senator Bernie Sanders is the most visible politician on the issue of Social Security.
His energy has pushed Hillary on her plan for the program. I am confident that, over time, he will force the GOP to engage with him as well. The man has a plan, one that he claims carries a seal of approval from the actuaries of the Social Security Administration (SSA).
The problem with visibility is that it invites scrutiny. Sanders’ plan doesn’t work on a good day. More troubling is the gap between the results of his plan and the reasoning for it. His plan does the exact opposite of what he is suggesting.
What Sanders is concealing
Senator Sanders promises voters that his proposal will “extend the solvency of Social Security for the next 50 years.” The statement is crafted around data that has been gerrymandered to conceal the fact that Sanders’ worst case scenario is actually the most optimistic assessment of a fairly favorable economy — which is not assured.
As an illustration, the Sanders’ campaign site promotes that Social Security has a $2.8 trillion surplus that “can pay every benefit owed to every eligible American for the next 19 years.” The system’s ability to pay actually depends on the economy not the surplus.
The Trustees of the Social Security Trust Fund actually say that the program’s ability to deliver schedule benefits for 18 years is about a coin flip. The Congressional Budget Office predicts that the system’s capacity for scheduled benefits is about 13 years.
Even if the economy cooperates, the SSA’s forecast overstates the revenue that his plan will generate. The evaluation provided by the SSA assumes the tax changes well before Senator Sanders could take office in 2017. The fact is that revenue from Sanders’ proposal cannot start flowing until he can convince House and Senate Republicans that his proposal is good policy. That process will drag well into 2017 at best.
What does solvency really mean?
Even so, what does 50 years of solvency mean to America? Solvent for 50 years means that a typical 35-year-old will enter retirement in the exact same position as the new retiree does today. At full retirement, today’s younger worker will expect to outlive scheduled benefits, unless politicians can sell the greatest accomplishment of government to a new set of younger workers who expect to lose money on the system.
In other words, 50 years of solvency is the cost to make the problem boomers are now facing an even larger problem for their children. Seventy-five years of solvency is the cost to make the problem of voters a larger problem for non-voters. Solvency is the definition of kicking the can, where we are only haggling about how far the can is kicked.
