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Lies, Downright Confusion or Statistics?
June 01st 04:52:00 PM
The Institute for Women's Policy Research released a Social Security Alert today that is filled with statistical mistakes.
The release states:
The 2006 report...projects Social Security will start redeeming trust fund bonds in 2026 in order to pay full benefits...
Clearly the authors of the release did not read the Trustees Report very closely. As page 2 explicitly states:
Annual cost will exceed tax income starting in 2017 at which time the annual gap will be covered with cash from net redemptions of special obligations of the Treasury...
Pages 3, 8, 16 42, 43, 50, 164, 165, 171, 181 and the official press release of the SSA all also cite 2017 as the year deficits begin and bonds must start being redeemed.
This makes it worth asking where the 2026 figure came from, and the answer reveals further errors in the release.
For one, the authors appear to be confusing interest payments with bond repayments. When the system beings running deficits, bonds must be redeemed to pay full benefits. However, all bonds will not be cashed in all at once; those that aren't will continue to earn interest. But it is a mistake to think that because interest is being credited to the Trust Fund from some bonds that other bonds are not being paid back simultaneously.
For another, the authors seem to have completely mistaken analysis. Later in the release, they state solvency could be achieved with a 2.02% raise payroll tax increase. But as the Concord Coalition points out this isn't a fix, it's a delay.
Even if taxes were raised by 2.02% of payroll to eliminate the actuarial deficit over seventy-five years, the system would begin to run annual cash deficits again in 2026.
This may explain where IWPR pulled the erroneous 2026 figure about the year of bond redemption, but it certainly doesn't excuse their mistakes.
Posted by Nicola Moore
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