Monday, January 05, 2009

Andrew Biggs, is an individual I spoke with about SS back in 1998. He had read a paper I wrote on “Why Economic Growth was bad for Social Security.” At the time he did not understand the relationship between wage growth, initial SS-OASI benefit and U.S. Treasury rates. In the past few years the Wage Growth replacement index has been given a lot of press. Many have finally realized that the initial SS-OASI benefit grows just as fast as the U.S. Average Wage Growth. This means there is no way for SS-OASI revenues to “grow” faster than liabilities. In fact the higher the U.S. Wage Growth, the smaller the spread between the U.S. Treasury Rate and Wage Growth, subsequently less work is done by any Social Security Trust fund.

I came across a blog by Andrew Bigg’s. I find his information for the most part wrong with bits of truth. President Bush appointed him as Deputy Commissioner of Social Security some time back. For those who are interested in the Social Security Debate, this may be a good place to stay current with the ideas being thrown around.

In my opinion this blog and its participants seem to accept the notion that Social Security is a bad deal for current workers. They realize the early participants received more in benefits than their payroll taxes could have paid. Diamond and Orszag call this the "legacy debt."As a result, current and future participants will have to collect $17 trillion less in benefits than they'll pay in taxes. In other words, this $17 trillion is a "pure tax," meaning that we'll pay that amount in but receive no benefits back in return.” Instead of tackling the problem and fixing, they are suggesting we bend over.

I have noticed that I am being censored with my comments. Andrew has a tendency to jump to conclusions. I posted a mathematical analysis yesterday in reply to one of his posts and it does not appear. I have found three of my comments missing. I must have struck a nerve.


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