Post by Logan on Feb 11, 2016 5:37:09 GMT -6
The conservative case against expanding Social Security? It was based on a math error
The conservative argument that the retirement crisis is a myth has been based on the notion that Americans actually will have far more in retirement resources than they recognize — particularly that Social Security benefits will amount to a much larger percentage of workers' lifetime income than has been assumed. Ergo, there's no need to expand Social Security to give retirees more.
Now it turns out that this assumption is based on an arithmetic error. On Wednesday, the Congressional Budget Office, whose extremely generous estimates of the so-called replacement rate from Social Security fueled the conservative position, fessed up. The CBO says it miscalculated the replacement rates in its long-term projection for the program issued in mid-December. It has now reissued the report with corrected figures, showing a "substantially lower" replacement rate for retirees.
To take just one example, the CBO reported in December that for the average retiree born in the 1940s, Social Security benefits would replace a healthy 60% of average late-career earnings. The new figure is only 43%.
This is a big problem for conservatives such as Andrew G. Biggs of the American Enterprise Institute, who made the CBO's original calculations a linchpin of his campaign against expanding Social Security. Last month, we examined Biggs' work on this theme — three articles appearing since mid-December in Forbes, the Washington Post, and the Wall Street Journal, asserting that the retirement crisis is "phony" (to quote the Journal's headline). Via Twitter, he has now retracted the Forbes piece. He says retractions of the others are coming.
Read more: www.latimes.com/business/hiltzik/la-fi-mh-flash-the-conservative-case-arithmetic-error-20160210-column.html
The conservative argument that the retirement crisis is a myth has been based on the notion that Americans actually will have far more in retirement resources than they recognize — particularly that Social Security benefits will amount to a much larger percentage of workers' lifetime income than has been assumed. Ergo, there's no need to expand Social Security to give retirees more.
Now it turns out that this assumption is based on an arithmetic error. On Wednesday, the Congressional Budget Office, whose extremely generous estimates of the so-called replacement rate from Social Security fueled the conservative position, fessed up. The CBO says it miscalculated the replacement rates in its long-term projection for the program issued in mid-December. It has now reissued the report with corrected figures, showing a "substantially lower" replacement rate for retirees.
To take just one example, the CBO reported in December that for the average retiree born in the 1940s, Social Security benefits would replace a healthy 60% of average late-career earnings. The new figure is only 43%.
This is a big problem for conservatives such as Andrew G. Biggs of the American Enterprise Institute, who made the CBO's original calculations a linchpin of his campaign against expanding Social Security. Last month, we examined Biggs' work on this theme — three articles appearing since mid-December in Forbes, the Washington Post, and the Wall Street Journal, asserting that the retirement crisis is "phony" (to quote the Journal's headline). Via Twitter, he has now retracted the Forbes piece. He says retractions of the others are coming.
Read more: www.latimes.com/business/hiltzik/la-fi-mh-flash-the-conservative-case-arithmetic-error-20160210-column.html