The New York Times editorial page has moved far on Social Security, leaving the chorus of crisis mongers to be an important voice of reason in last year's debate. However, it now appears to be regressing. Today's lead editorial notes the plans of Chile's government to overhaul the privatized Social Security system that had served as a model for proponents of privatization in the United States. The basic story is that the system did not deliver -- it was not providing Chile's workers with a secure retirement. While the discussion of Chile is on the money, the piece then goes on to make the case for addressing the projected shortfall in the U.S. system. It argues for the need for a balance of benefit cuts and tax increases to address the projected shortfall. This discussion includes the bizarre assertion that the program would only be able to provide an average replacement rate of 10 percent if its shortfall was addressed with benefit cuts alone. It is not clear where this number comes from, but the CBO projections show a very different picture. Until 2046, the program can pay all scheduled benefits with no changes whatsoever. After 2046, Social Security is projected to be able to pay close to 80 percent of projected benefits, with this ratio gradually falling over subsequent decades. However, even in 2080, it is still projected to be able to pay 75 percent of scheduled benefits. With an average projected replacement rate of 35 percent, this means that even in the distant future, Social Security would be able to replace more than 25 percent of an average worker's pay, assuming that no taxes for the program are ever raised. We may at some point want to raise SS taxes (raising the wage cap would be the obvious place to start). We may even decide at some point to reduce scheduled benefits. But, let's use real numbers to make the case, not some scary numbers from nowhere.
--Dean Baker
