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January 02, 2005
Let's Take A Trip To The Land Of Boring Graphs About Social Security
I'm going to write a lot about Social Security this month. As I've mentioned before, I took a wrong turn in life and learned a gigantic amount about this unbelievably boring subject. In fact, Social Security is probably the only subject I actually do know a lot about... except perhaps Iraq's missing WMD and the starting lineups of the 1979-86 Washington Redskins.
BUT -- as boring as Social Security is, it is extremely important. Indeed, it is probably the most important achievement of America's democracy. It allows us to join together and do for ourselves what we could NEVER do as individuals. It has made the lives of millions of Americans better.
For instance, because of Social Security, my grandmother -- who had been a divorced single mother supporting herself for many years -- was in her old age able to live in her own apartment, independently, with dignity and without anxiety or feeling she was a burden on my father and aunt. She told me many times how grateful she was for this.
Now, there's some good news and bad news about Social Security.
The bad news is this: GEORGE BUSH WANTS TO DESTROY IT. He does not plan to "reform" Social Security, or "strengthen" it. He wants to kill it. He wants to turn the clock back to a time when old people starved in the streets. He wants to force us to give billions of dollars to Wall Street. And most important, he wants Americans to fight each other for scraps, rather than using the government to join together to cooperate in making things better for everybody.
This is the real reason people like Bush have hated Social Security since its birth. They want us fighting each other. They don't want us to realize that when we work together, and care about each other, we can do amazing things.
Social Security is a living, breathing example of this. That's why they want to strangle it.
And that's why WE MUST WIN THIS FIGHT. The dismantling of Social Security would perhaps be an even greater disaster, for even more people, than the invasion of Iraq. This is no joke, just like the 1000+ Americans coming home to lie in the cold ground is no joke.
The good news is, we can win this fight. That's because Social Security is absolutely fine. I realize this may be hard to believe, considering what you hear every day from Bush, other politicians, and newspapers and TV. But just remember: all of them also told you that Iraq definitely had terrifying Weapons of Mass Destruction. There was no question about it! Everyone agreed!
They are being just as honest here.
So we can and should win. But this will only happen if we educate ourselves, fast, and then mobilize.
That's why I'm writing this. There is little out there -- really, almost nothing -- that explains Social Security in a way normal humans can understand. I'm hoping to fill that gap.
So I would greatly appreciate any feedback you have on this. I want this to be clear, easy to understand, and fun to read -- and to answer all the questions people have about this. Please check these posts out, and let me know if I've failed in any way or there are ways it can be improved.
This will arrive in different chunks, but eventually I'll pull it together into a coherent whole. The coherent whole will probably have three parts:
For people who don't care about the details.
This part will say: THERE'S NOTHING WRONG WITH SOCIAL SECURITY, AND WE'VE GOT TO STOP GEORGE BUSH FROM KILLING IT. That's all you really need to know.
Then there will be tips on what actions you can take.
For people who want to know a little more, either for themselves or so they can discuss it with family and friends.
Here I'll provide a few easy to read graphs, etc. This will be similar to this page by the economist Dean Baker, co-author of Social Security: The Phony Crisis. In fact, it will be more than similar -- I'll probably just rip it off in its entirety.
As it happens, I worked for Baker briefly several years ago; in fact, I helped fact-check The Phony Crisis. (This is how I learned so much about this without dying of boredom -- I was being paid.) Baker is one of the most intelligent and honest people I've ever met, and I recommend all of his work on this subject. You can find some of it here.
For people who really want to know the nitty-gritty.
Most of what I've written below will go in this part.
A. Retirement: What Is It? And Why Can't I Retire Before I Start Working?
Let's start with some basics.
Before understanding Social Security, you have to understand something else: retirement in general.
(DON'T SKIP THIS -- it's important.)
There hasn't always been such a thing as retirement, and certainly no such thing as organized retirement. You worked on the farm or in the factory until you died. And if you became unable to work before you died, you had to hope you had children who could take care of you. If not... well, you usually weren't alive much longer.
But gradually societies became richer. There was enough food, housing, etc. produced every year that older people could actually stop working -- and not die! This was a big step forward. Frankly, many jobs suck. And if you can stop working when you get old, yet not die, this makes life much nicer.
Here are some of the suckful jobs:
Ã¢â‚¬Â¢ working in a mine that every now and then collapses on you
Ã¢â‚¬Â¢ working on a farm with a thresher you occasionally fall into
Ã¢â‚¬Â¢ being the personal assistant of Diana Ross
The important point to grasp about all this is the basic fact about what retirement is -- no matter what country you're in, no matter what year it is, no matter what retirement is called. So, here's the basic fact:
Every year, a certain number of people are working. Other people aren't -- mostly children, retirees, and those so rich they don't have to work.
Every year, the workers produce a certain amount of stuff. This stuff must be divided among them, AND all the people who aren't working.
For children, their share usually takes the form of money earned by their parents. For the idle rich, their share is usually called "return" on "investments." For retirees, their share can be called many things: Social Security, a pension from the business they worked in, their own investments, etc.
That's what retirement is. Younger people who are working give retirees some of what they produced that year.
It's very, very important to remember this when you hear people talking about Social Security, and about "saving" or "investment."
REMEMBER: Individuals save, but societies as a whole DO NOT. In other words, let's say you want to "save" so you can eat in 50 years. This doesn't mean you put corn in a cave that you will take out and eat in 2055. Instead, you give some of your extra corn to people who eat it now... in return for which, you get to claim a portion of the corn that will be produced in 2055.
* Well, actually it's not quite that simple. But it's almost that simple. I will explain some of the complications at a later date.
B. Social Security: What Is It? And, How Can I Get Me Some?
Now, some more basics: what does this mean to us, Americans living in the exciting 21st century, where we apparently can clone our deceased pets?
Every year, American workers produce lots of stuff -- cars, potatoes, steel, houses, clones of dead pets, songs called "Oops!...I Did It Again," angry little websites. And so forth.
All of this added together is called the Gross Domestic Product, or GDP. According to the World Bank, in 2003 the American GDP was worth 10.89 trillion dollars. As I say: lots of stuff.
A certain portion of the GDP is handed over to retirees. For richer retirees, some of this portion is called "return" on "investments" (either via private savings, a pension from a former employer, or both).
And -- another portion of what's handed over to retirees is called "Social Security."
Here's how Social Security works:
Money is taken out of the paychecks of current workers, and handed over to retirees. It all goes directly to the recipients (except for a teeny-tiny amount the government takes to pay for the Social Security Administration's computers, staff, etc.).
In 2003, the amount handed over to beneficiaries via Social Security was $479.086 billion. This was 4.40% of the 2003 GDP.
For those interested in the math:
This page from the latest official Society Security Trustees report gives total 2003 disbursements from the OASI Trust Fund as $405.978 billion, and total disbursements from the DI Trust Fund as $73.108 billion.
$405.978 billion + $73.108 billion = $479.086 billion
The World Bank says 2003 GDP was $10,881.609 billion
479.086 billion / 10,881.609 billion = .04402713 = 4.40% of 2003 GDP
* In this case, it really is that simple. Sort of. What's called "Social Security" includes the Old-Age and Survivors Insurance (OASI) Trust Fund and the Disability Insurance (DI) Trust Fund. OASI money is taken out of current workers' paychecks and handed over to retirees and survivors (children and spouses) of workers who've died. DI money is taken out of current workers' paychecks and handed over to those disabled by workplace injuries.
BUT -- the bulk of Social Security goes to retirees. And that's the part of Social Security that's supposedly a problem. So throughout this, I'm just going to lump it all together.
Whew. Well, thanks for reading this far. Check back later tonight here for more, including the promised graphs.
Okay, I wasn't telling the truth about the graphs being here "later tonight." But they will arrive soon, and I'll put a notification on front of the site when they're done.Posted at January 2, 2005 02:31 PM | TrackBack