“Saving” Social Security

I just love this post from Jonathan Chait, so I'm going to borrow it wholesale:

 The New York Times, summarizing John McCain's stance on Social Security:

He said he favored offering private investment accounts to younger
Americans, though it was not clear that investment accounts alone could
address the financial shortfall that the retirement system could face
in coming decades.

News accounts are constantly saying something like this. It's one of
those phrases that seems to be programmed into the computer of every
reporter who ever touches on Social Security. But it's wildly
inaccurate. Private investment accounts do not improve solvency at all. They make it worse.

Look, it's pretty simple. If you let younger workers divert some of
their Social Security tax dollars into private accounts, then that
money is not available to pay for regular Social Security benefits. So
for every dollar of private accounts that would be created, another
dollar of benefits has to be cut just to stay even. If the only element
of your plan is to create private accounts, which is the case with
McCain, then your plan worsens Social Security's finances.

I think I've made the following analogy before. Suppose my “plan”
for saving Social Security consists of building giant gold statues of
President Bush throughout the country. (Maybe the theory is, I don't
know, that the statues would make future retirees more patriotic and
thus more willing to accept lower Social Security benefits.) If
newspapers reported on this plan, would they say that “it's not clear
that the statues alone could address the financial shortfall that the
retirement system could face in coming decades”?

Jonathan Chait

What's especially sad is that the Times and the Washington Post are among the best of our media outlets and they are constantly guilty of this pathetic reporting.

About Steve Greene
Professor of Political Science at NC State http://faculty.chass.ncsu.edu/shgreene

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