Is Cato Controlling `Long-Term Forecasts' About Social Security, for Privatization Purposes?
Jan. 17, 2005 (EIRNS)The cover story of the Jan. 24 issue of Business Week, in the course of a long analysis proving that private accounts won't "make up" the benefit cuts in Bush/Cheney's or any other privatization plan, lifts the corner of an "actuarial" scandal, related to the political scandal of the White House forcing the Social Security Administration to push its "crisis scenarios."
The actuarial scandal is simple. The "long-range forecasts" projecting Social Security revenues and benefits out to 2075, are assuming: 1) the stock market will rise an average 6.5% a year after inflation for those 70 years; 2) the economy will grow only 2% a year after inflation, on average, over the same decades; and 3) the American labor force, which contributes to Social Security, will grow only 0.35% a year, on average, through that period!
Leaving aside the plausibility of any of these forecasts through a looming economic collapse, it is nonetheless clear that these three wildly different assumptions could not be true of the same economy over the same period. And each of the three assumptions is dramatically different from past history, especially that of the U.S. labor force, whose historical average growth is 1.4% annually. Moreover, each of these assumptions of the Bush appointees is markedly different than those made by Social Security actuaries in the 1980s and 1990s.
But put these three wacko assumptions together, and you get a $3.7 trillion deficit over 70 years in the Social Security system; and you get a fantasy picture of "private accounts" in stocks and bonds partially making up that deficitthe rest is handled, and then some, by cutting benefits, in the swindles whizzing around the White House today.
Who's making those forecasts? Social Security Chief Actuary Stephen Goss is a recent Bush appointee, both to the 2001 "Commission to Strengthen Social Security," and then to his present job. Goss is an advocate of privatizationone had to be, to get on that Commissionand has estimated that a Bush plan should make $18 trillion in benefit cuts through 2075. At least three of the Commission's 14 members were from the Cato Institute. And the current Assistant Commissioner of Social Security for Retirement Policy, Andrew Biggs, 37, is from the Cato Institute.