Wednesday, March 09, 2005

Worse Than Luskin

There's an op-ed in the WSJ today (sub. req., but trust me you don't really need to read it) which is even loopier than something Donald Luskin would write. Now, that's not all that surprising -- it is the WSJ after all. But, there's something a bit weird about it. The guy who wrote it, Thomas Saving, is described as "Mr. Saving, senior fellow at the National Center for Policy Analysis, is director of the Private Enterprise Research Center at Texas A&M University."

All that's true, but this idiot is also one of the Social Security Trustees. Wonder why they left that part out.


One way to assess the problem is to calculate the present value of the difference between expected expenses and revenues. Last year, for the first time, the Trustees reported such calculations for both Social Security and Medicare and the numbers are startling. Over the next 75 years, scheduled benefits exceed dedicated revenues by $33 trillion, measured in current dollars. Looking indefinitely into the future, the present value of the additional revenues required by Social Security and Medicare total almost $74 trillion. To put that number in perspective, obligations to the elderly are more than six times the size of the economy and 18 times the size of the outstanding federal debt.

For many years, the Trustees' Reports adopted a 75-year time horizon. But it is now understood that looking only 75 years into the future gives a misleading picture. Consider a worker who will retire in year 76. A 75-year horizon counts all of the taxes this worker will pay over the course of a lifetime, but ignores the benefits. To avoid this problem, the Trustees' Reports are now including calculations that look indefinitely into the future.

The unfunded liability under Medicare is six times larger than under Social Security, but the two are connected. Any reform that puts one program on a sounder footing helps the other. Indeed, the strongest argument for the reform of Social Security is the existence of Medicare.

...just to add, he does say it himself in the piece but it's nonethelss an odd thing to leave off the bio tagline. And, as Josh points out, it also leaves off another important affiliation...