Economist: Social Security is Not a Problem

August 16th, 2011
in econ_news

Social-Security-card Econintersect: Jared Bernstein, a liberal economist who has served and continues to serve a number or roles in the Obama administration, has taken on a popular conception of political conservatives. In this case he has chosen to argue using data. Data presented by Bernstein on his blog, On the Economy, Bernstein says the data shows Social Security costs, currently running at approximately 5% of GDP, will grow very gradually over the next 70 years. The burden will be approximately 7% of GDP by 2080, according to CBO (Congressional Budget Office) data.

Follow up:

Here is the graph Bernstein presented:


Bernstein points out that there is a funding shortfall over the 75-year horizon amounting to 0.8% of GDP.  He suggests that is not difficult to resolve.

What is obvious in the graph and is also discussed by Bernstein, is the growth of federally funded health programs from about 7% of GDP this year to about 22% by 2080. Here is what Bernstein says about that:

…as a share of GDP, neither Social Security nor other spending (which includes the discretionary spending that everyone’s all gung ho to slash away at) are driving government spending as a share of the economy. It’s health care. And as I’ve stressed every time this comes up, that’s not a gov’t problem—that’s just a problem. In fact, health costs grow faster in the private than in the public sector.

The final statement is subject to debate: GEI Analysis has an article showing that, from 2000 to 2010, growth in healthcare costs were approximately the same per capita in public and private systems.

Sources: On the Economy and GEI Analysis

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1 comment

  1. Gary Reed Email says :

    Monday, I am a retired life/health ins. agt. w/45+ years in the business. So, I speak from a huge amount of experience. My interviews amount to hundreds if not thousands. The answer to the s.s. problem, and there is a myriad of basic problems w/ the present "ponzie" scheme, is terribly simple. The answer is hiding in plain sight noticable only to those of us who know that answer is ANNUITIES!! I don't expect the 535 to know anything about the annuity.To who ever reads this, was a contract involved when you bought your house,car,boat,farm,business,etc? We both know there was. We know,too, that nothing can be written into it or out of if once all parties have signed it. As you know this is NOT the case w/ the "scheme". Cong.& Sen. can do "dip" into it to pay other bills. Pres.Bush & Chas. Grassley tried years ago to sell the public on the concept ofprivatizing s.s.--to no avail and it "died". They didn't know how to sell the concept. This is what happens when 99% of the cong.& senate try to do something they KNOW NOTHING ABOUT. One has to put a little "sugar" w/ the effort. That "sugar" is making deposits into an ANNUITY TAX DEDUCTABLE. The millions of people who know nothing about annuities would begin flooding their phones with calls to their tax preparer,tax acountants,estate planners, insurance agents asking "what is the annuity, I hear I can make tax ded. deposits into it?". But, that is the "sugar" that Bush & Grassley should have used--but sadly didn't. The annuity can replace ALL pension depts including the retirement portion of s.s. People do change jobs numerous times. This will not be a loss to the person as they will take their annuities w/them. Companies do go bankrupt.This also won't be a loss 'cause the person will take his annuity w/ him. What does the gov't pay towards the expenses associated w/ running the Ponzi? Number of employees,buildings, computer equipment, un-named expenses? Give W.T.P. back our responsibility of providing for ourselves! Unions & states are experiencing unfunding of pension benefits. This would not happen if each citizen was responsible for his retire- ment. If the gov't needs to provide a minimum benefit to those who don't or have never worked so be it. But, for those of us who do take our retirement seriously,GET OUT OF OUR WAY!! At the minimum, PLEASE GIVE US A CHOICE of paying into the ponzi or an annuity. The annuity concept must have proper & binding law from the gov't. Respectfully, Gary Reed

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