Wednesday, April 06, 2005
Is there a crisis (part 1)
One of my readers asked me to comment on the website http://www.thereisnocrisis.com/ I will, but I have not read them yet, so that I could give my own opinion of the question. Is there a crisis? Maybe. I know 3 things on the subject:
1) The actuaries best (conservative) guess is that there is a significant hole in the financing of Social Security benefits
2) The later we fix such a hole, the more dramatic changes will be necessary (especially benefit cuts and tax increases)
3) Over the past 10 years, the actuarial estimates have proven to be quite conservative, indeed.
Those 3 points, taken together, could certainly suggest to one that there is no crisis, just a bunch of conservative actuaries. The second point, by itself, makes the word "crisis" quite ambiguous when applied to the Social Security situation. It's not that we need a big change today. It's that the change required gets bigger the longer we wait. But the first point is where I hang my hat. While things have gone well for the past 10 years, I still think that the actuaries "intermediate" guess as to the financial health of SS is the one which we should base policy. Since it foresees a hole, I call it a hole and think that we ought to do something.
A crisis calls for crisis type measures. I definitely agree that this isn't a crisis, so we should be taking more carefully considered measures, and measures which leave the system largely in tact. So I guess that I almost agree with the sentiment "there is no crisis," but that doesn't mean that we don't need to take action, and today that action will be less drastic than if we wait for tomorrow.
I'll try and continue this thought after I have a chance to digest the main points of the above referenced website.
As always, thanks for reading.
1) The actuaries best (conservative) guess is that there is a significant hole in the financing of Social Security benefits
2) The later we fix such a hole, the more dramatic changes will be necessary (especially benefit cuts and tax increases)
3) Over the past 10 years, the actuarial estimates have proven to be quite conservative, indeed.
Those 3 points, taken together, could certainly suggest to one that there is no crisis, just a bunch of conservative actuaries. The second point, by itself, makes the word "crisis" quite ambiguous when applied to the Social Security situation. It's not that we need a big change today. It's that the change required gets bigger the longer we wait. But the first point is where I hang my hat. While things have gone well for the past 10 years, I still think that the actuaries "intermediate" guess as to the financial health of SS is the one which we should base policy. Since it foresees a hole, I call it a hole and think that we ought to do something.
A crisis calls for crisis type measures. I definitely agree that this isn't a crisis, so we should be taking more carefully considered measures, and measures which leave the system largely in tact. So I guess that I almost agree with the sentiment "there is no crisis," but that doesn't mean that we don't need to take action, and today that action will be less drastic than if we wait for tomorrow.
I'll try and continue this thought after I have a chance to digest the main points of the above referenced website.
As always, thanks for reading.
