SSI – Indexing Choices & the True Costs

From: Running on Empty by Pete Peterson

· When looking at the policy implications surrounding reform off SSI, here is a proposal made by Pete Peterson.

I like the idea a lot, & think it should be seriously considered…ram

"One feature of Social Security that few people understand, including some officials high up in government, is that it promises ever higher benefits to each new generation of retirees. The reason is simple. Under Social Security's benefit formula, your pension is calculated as a percentage of your lifetime earnings; but these earnings are indexed to the average earnings or wages of all workers in the year you reach age sixty-two. Since wages over time tend to grow faster than inflation, each generation receives pensions that have more and more purchasing power.

Here's an example of how it works. A full-time average-wage worker retiring in 2001 received an initial monthly benefit of $1,051. But by 2031 a full-time average-wage worker will be entitled, under current law and projections, to a benefit of nearly $1,460 in today’s dollars---in other words, a benefit worth 39 percent overall- pushing wage-indexed' benefits up by the same amount. Wage-indexing explains why it's impossible to 'grow our way out of Social Security's long-term deficit even if we faced no demographic pressure. Since benefit levels rise in tandem with wages and productivity, faster GDP growth simply translates into faster total benefit growth.

Wage-indexing was not always part of Social Security. For many years after the program began operation, the benefit formula was not indexed to anything. Congress adjusted it every few years as it liked. As we have seen, these ad hoc benefit hikes got out of hand in the late 1960s and went haywire after the Social Security expansion of 1972. In 1977 Congress instituted wage-indexing to set new benefits. And it's been wage-indexing ever since. This, in combination with yearly 100 percent cola adjustments for benefits already awarded, means that Social Security benefits become continually more generous even as the relative number of workers available to pay these benefits declines.

Did we have to take this course? Not at all. In fact, just a couple of years after Congress opted for wage-indexing, Prime Minister Margaret Thatcher came face to face with a similar crisis in the British national pension system. As part of her solution, which was later endorsed by Laborites as well as Conservatives, she chose price-indexing instead of wage-indexing to set new benefits. The outcome of this tale of two countries is quickly told. In the United States, projections of insolvency continue to plague Social Security's future. In Britain, sustainability has been totally achieved. Britain's pay-as-you-go pension costs show zero projected growth as a share of worker payroll or GDP a positive fiscal prospect.

Later as is actuarially sound larger real-benefit amounts could be granted."

Pete Peterson from "Running on Empty"

The Difference between ‘True Science’ and ‘Cargo-Cult Science’

How does one distinguish between science and pseudoscience, between true science and cargo-cult science?  Many believe that Karl Popper’s falsifiability criterion provides it, but Popper’s criterion has numerous difficulties, which philosophers have pointed out. Feynman has provided a much better way to test for true science in his essay “Cargo-Cult Science”:

… there is one feature I notice that is generally missing in cargo cult science.  … It’s a kind of scientific integrity, a principle of scientific thought that corresponds to a kind of utter honesty — a kind of leaning over backwards.  For example, if you’re doing an experiment, you should report everything that you think might make it invalid — not only what you think is right about it: other causes that could possibly explain your results; and things you thought of that you’ve eliminated by some other experiment, and how they worked — to make sure the other fellow can tell they have been eliminated.

Compare Feynman’s scientific integrity with the continual attempts by the leaders of climate “science” to prevent skeptics from checking their data. True scientists would be extremely pleased to provide all raw data, and they would make the data available to all on the Internet. A state attorney general would not have to file suit to make them disgorge.

via instapundit.com

It’s Just The Way They Lie To You…

Budget Trickery By PETER SUDERMAN

“In the federal budget process, the baseline scenario is typically based on current law. But the Obama administration has argued that it should be able to work from “current policy.” That way, they can stuff all sorts of expensive future changes into the baseline.

Changing the baseline doesn’t generate any actual savings. But it allows the administration to ignore certain policies and only measure the changes that produce favorable results.

So this year, the White House decided to assume the cost of several provisions from its stimulus bill — expansions of the child tax credit, the Earned Income Tax Credit, and Pell Grants — into its baseline. Those policies were all explicitly created to be temporary. But by quietly assuming they’ll continue on, the administration avoids accounting for $216 billion.

Congress has its own trickery. There’s a pay-as-you-go requirement that says every spending hike must be accompanied by a tax increase or cut somewhere else. But Congress disregards these rules all the time. Since 2007, Democrats in Congress have violated PAYGO requirements to the tune of nearly $1 trillion.”

Mel Gibson & Oliver Stone… Our Moral Beacons?

"the left-wing blogosphere????" Where is the NYT? Not to mention the other usual suspects…..

http://volokh.com/2010/07/26/mel-gibson-and-oliver-stone/

So, what will it be for Hollywood liberals? Is anti-Semitism only unacceptable when it comes from right-wing Christians, or equally bad when it comes from non-Christian leftists, who add a bit of anti-Israel window dressing? (The early returns are not promising; so far, the left-wing blogosphere has responded to Stone’s remarks with deafening silence).

The US has been "an outlier" among nations who have been confronting the challenges posed by what Pimco, the world's largest bond fund with more than $1 trillion in assets under management, calls the "new normal" of prolonged slow growth. "Somehow in the US we are caught in this active inertia that results in just a cyclical response," said El-Erian, the firm's co-CEO. "We need more than that. we need cyclical and structural."
Pimco co-CEO Mohamed El-Erian

We've "confronted" our problems by stimulating the government not the private sector.