Constant reader smlook noted the following in another thread:
[A] couple of months ago there was a thread touting how bad Bush’s SS reforms would be and many at this site used a calculator to project how awful the results would be…
You will be relieved to know… maybe we can start another thread so everyone can recalculate the results.
A Rigged "Calculator"
Democrats harness false assumptions to generate projections that individual Social Security accounts would be losers.
Have at it… 😉
Max S takes issue with the 6.5% growth assumption of the SSA.
oops. make that “Dean Baker takes issue with…”
private accounts are dead. nobody sent Bush the memo.
I’d seen that this was a crap-worthy calculator a while back. So…lying sacks of shinola?
So, can we say that SS is really a pre-tax retirement plan? If so, why don’t we allow people to simply put more money into SS for their eventual retirement?
a 3% growth assumption might be wrong on the pessimistic side, but the 6.5 % growth assumption is definitly pure BS.
This is an open thread, so I’m linking to this story by Michael Berube. Word of warning…you might want to make sure you’re not gonna have to rush into a meeting or at least make sure you’ve got a tissue or two nearby. I’m still blubbering like a fool.
Bad cold today. Blech. Anybody know why sudafed gets less effective after a dose or two?
“If so, why don’t we allow people to simply put more money into SS for their eventual retirement?”
And turn them into ‘worthless IOUs’? Fantastic!
Wasn’t that Berube story sweet? I saw the link from Body and Soul, and caught myself misting over a little when I read it.
A significant thing to notice is that no one really cares about the claims they made in the other thread if it can’t be used to make Bush look bad.
No surprises there, but you can’t blame a guy for hoping that for better…
A significant thing to notice is that no one really cares about the claims they made in the other thread if it can’t be used to make Bush look bad.
You might have more luck with this if you point out specifics, smlook.
“Rigged”? Those fact-check people are sure non-biased.
The 3% figure happens to be based on the same assumptions that the Bush people are using to hype the social security “crisis.” They assume very low growth rates (as also reflected by the 3% stock growth figure) in order to increase the future shortages in the collection of SS taxes. If you assume the solid growth figures that support the higher stock figure, there is no shortfall in SS for decades.
When are the Annenberg people going to get honest and call the entire Bush argument re SS “rigged”?
No doubt the calculator is deceptive. To speak of a 3% risk-adjusted return is to say that investors consider a risk-free 3% the equivalent of a riskier, but higher on average, return on stocks. This is fine if you want to talk about risk/return tradeoffs, but not really accurate when just discussing average returns.
It’s worth noting, though that the privatization advocates engage in more than a little deception of their own. The trustees’ projections, even the “low-cost” optimisitic projection, are quite conservative about future economic growth. If you use a set of assumptions that produces healthy equity returns instead you will find that Social Security is financially sound, so long as Bush doesn’t renege on the trust fund bonds.Under the Trustees assumptions, equity retrns are much less promising than we are being told. This inconsistency, pointed out by Dean Baker, Bruce Webb, and others, has been ignored, to be polite, by privatization advocates.
Edward,
Not enough time for that today… or lately for that matter.
This is what caught my eye:
“To their credit, the authors of the calculator state their basic assumptions clearly for anyone wishing to read and analyze the fine print, which is more than we can say for a number of other web-based calculators we’ve seen.”
Wonder why they didn’t name names.
To their credit, the authors of the calculator state their basic assumptions clearly for anyone wishing to read and analyze the fine print, which is more than we can say for a number of other web-based calculators we’ve seen.
And certainly more than can be said for the disinformation campaign the Bush administration is waging over SS.
Ah, dilemma. Not enough time for specifics. Good thing this thread was opened, then.
via Sully
Catsy,
I suspected this thread would turn into more Bush bad mouthing, but no real numbers for recalculation.
C’mon guys… won’t somebody actually try to recalculate based on the new information? Everyone was so quick to jump on the calculator before. Are we now a little scared about what it might reveal?
No one willing to at all????
If anyone will atleast go back and link to the original thread I will make some time tomorrow to try and recalculate for you. I tried to do a quick search, but I couldn’t find it.
smlook,
what made it so attractive last time was the ease of it. You punched in your age and your salary and the calculator did the rest…I can’t see how to do that on this counter site.
show me a math-idiot-proof calculator and I’ll be happy to use it.
Living Will: I’ve defined a specific test — if I refuse to drink a glass of good Zin, any and all plugs may be pulled.
won’t somebody actually try to recalculate based on the new information?
smlook,
Where is the revised calculator?
I did look at the link to factcheck. They make some good points, but also fall for the “bankrupt in 2041” line.
Hey, speaking of bankruptcy, if SS goes bankrupt in 2041, in light of the new bankruptcy law Congress just bestowed upon business (and Bush is reportedly “eager” to sign), doesn’t that mean the US govt must still find a way to work out SS repayment plans?
I mean if the new bankruptcy law is going to stick it to the average taxpayer, why not use a similar philosophy to stick it to the “deficit?what deficit?” government?
I just filed my taxes and I want my payroll withholding back. Preznit stole my moneys!
I mean if the new bankruptcy law is going to stick it to the average taxpayer, why not use a similar philosophy to stick it to the “deficit?what deficit?” government?
This is totally clever — I plan to annoy Rebuplican friends with it for weeks.
Shortly after that, I plan to learn how to spell Republican.
Rebumpkinlan is not correct
according to Media Matters, the new Heritage SS calculator is a little iffy, too: go see
via Atrios, of course
Rebumpkinlan is not correct.
For those of you who remember Dragonlance, I read it as “Rebupulican.”
I suspected this thread would turn into more Bush bad mouthing, but no real numbers for recalculation.
C’mon guys… won’t somebody actually try to recalculate based on the new information? Everyone was so quick to jump on the calculator before. Are we now a little scared about what it might reveal?
No one willing to at all????
You mean you haven’t? I mean, here I am trying to give your argument the benefit of the doubt, and yet I find out you’re simply tossing out accusations that Democratic projections are wrong without actually knowing whether or not they really are?
Say it isn’t so!
If anyone will atleast go back and link to the original thread I will make some time tomorrow to try and recalculate for you. I tried to do a quick search, but I couldn’t find it.
You do that. So far all you’ve managed to produce is an article by Factcheck.org. Now, if you want to rely on them as authoritative, be my guest–but that’s a sword that cuts both ways, and you may find some of the ways it cuts to be highly uncomfortable.
If you take into account the Bush adminstration’s assumption that long term GDP growth with be 1.9% per year, then the 3% looks pretty optimistic.
Hey, while we’re on the subject of ideologically-driven economics, what do you folks make of this PDF on the national sales tax proposal?
The group gets a lot of funding from liberal foundations, and I haven’t had much luck confirming the legitimacy of their analysis (not that I’ve put too much time into it). Their conclusions are pretty stark, however, so I’d love to find out if there is any truth in them. But what really caught my eye was the following passage:
I nearly had an aneurism when I read this. Has anyone else heard this claim?
smlook: I just posted at least one problem with FactCheck’s analysis of the calculator on the other FactCheck thread. (Basically: they are criticizing the calculator on the grounds that it uses a rate of return on ‘your investments’ that is lower than projected returns for stocks. This would be a good criticism only if ‘your investments’ were 100% in stocks. If they are partly in bonds, of course the return will be lower over time. How much of the discrepancy is due to this, I don’t know.)
Is this an open thread, or just an open thread about SS in the US? I keep far from the latter, but would like to point to the Lancet (my newspaper had an article about the research this morning);
According to my newspaper the lethal injection itself is so painfull that the stuff it is prohibited to use for animals in quite a number of states (incl. Texas). Appearantly people executed that way died a very very painfull death but couldn’t express that due to the muscle relexant. In view of the fact that quite a number of innocents die via capital punishment and polls show that most Americans are aware of that that ought to raise some protest – no?
Oeps, forgot to link to the lancet. I have no subscription, so I can only read the intro. And my paper is Dutch, so not very linkworthy here.
Dutchmarbel- Nope. Watch some American comedy sometime.
Lethal injection is a complete mystery to me. I’ve seen objections on the basis of painfulness, and there are fairly frequent stories about significant mechanical difficulties in executions. I don’t understand how either of those can be a problem.
(A) An overdose of morphine will kill you painlessly. You go to sleep and don’t wake up. The same can be said of most other anesthetics. Why are they using something that kills you painfully, and then anesthetizing on top of that?
(B) It’s an IV — this is not rocket science. A minimally trained phlebotomist gets a needle in my veins every eight weeks when I donate blood. How can this be a consistent problem?
I’m opposed to the death penalty in general, so the inhumanity of the methods is sort of a minor corollary issue for me, but I just don’t get it.
The big problem with extrapolating investment returns is that it pretty much takes sustained expansion to keep those fed. And I’m going to make a SWAG here that economic expansion necessary to sustain real return rates in the 6% range isn’t sustainable. To do that, we need to keep expanding the industrial base, and that just isn’t going to happen. There are population, environmental and energy availability constraints that are going to keep growth in check.
I’d be happy to be proven wrong, here.
The big problem with extrapolating investment returns is that it pretty much takes sustained expansion to keep those fed.
Right. The other problem with appraising privatization based on long-term averages is that it fails to account for the fact that these are only /averages/. For a system designed to provide a certain minimum level of financial sustinence, I’d be far more concerned with the low end of the range than with the mean, and with what percentage of the sample set was below that average.
Examining the DJIA historical values is instructive. Accounting for inflation, the DJIA has grown at an average rate of under 3% per annum over its life. I could be wrong on this, but I’m using the historical index and some pretty commonly available inflation calculators, so unless I’ve committed some horrible math errors…
Of course it’s possible to obtain higher growth than the DJIA, but broad-market mutual funds are a much safer investment than what (in hindsight) turns out to have been the higher-performing markets. So if I were doing prediction, I’d use the market index.
Ack. Edward, I wrote my factcheck.org post and didn’t see this one at all.
Yours is better Charles…run with it.
This is an open thread.
e
Slarti,
One possible problem is that you are not accounting for dividends, which form a major part of the return on large companies – precisely the type included in the DJIA. This was much more the case in the past than now. So simply calculating the growth in the index severely understates the return.
The DJIA has other problems as an index. It is heavily concentrated on large firms. It also is a price-weighted average, which means the caculation is somewhat bizarre. The S&P 500 is much better.
Ah, so if there had been such a thing as index mutual funds back then, they’d have appreciated a lot more prior to the 1980s (or so) than is accounted for by the index, because of dividends? I suspected I was probably missing something.
And yes, I’m aware that there are better mixes of stocks than the those that comprise the DJIA. Where all this is coming from is retirement planning; I’m looking at providing for retirement (which is still quite a ways off, thank the Maker) and I’m having a hard time reconciling historical advances indexed funds with my fund manager’s long-term projections.
The fund manager is projecting about 6% real returns, BTW. Actual real returns of 3% would change the picture quite a bit.
Thanks for pointing that out; I’ll probably sleep a bit better tonight.
Catsy,
Huh?
I am not the one who used the calculator to dismiss Bush’s program but many others did.
They even posted the results of the calculator to mock Bush’s program.
Interestingly, enough no one has been willing to post both results of the calculation. The original one and the new one.
But, then that would imply that one isn’t going to be biased… which it clearly seems that isn’t the case here.
Ah, so if there had been such a thing as index mutual funds back then, they’d have appreciated a lot more prior to the 1980s (or so) than is accounted for by the index, because of dividends?
Almost right. They would have appreciated as shown by the index, but you would have gotten the extra benefit of collecting the dividends. If you reinvested the dividends your portfolio would have grown more than the index.
Interestingly, enough no one has been willing to post both results of the calculation. The original one and the new one.
Present company included. You brought it up; put up or shut up.
But, then that would imply that one isn’t going to be biased… which it clearly seems that isn’t the case here.
“How black your feathers are,” said the crow to the raven.