Social Security: Figures don’t lie. Liars don’t figure.

The following offered to you by non-blogger myrln:
Among Dumbya’s usual lies, half-truths, distortions, and scare tactics about Social Security is the point made about how in 1940 there were 40 people to meet Social Security payouts for 1 person but in 20xx, there will only be 2 for every 1.
“Horrors,” we’re supposed to think, “my salary will be cut drastically for these SocSec recipients (or sponges).”
Well, Dumbya’s 20xx number may be right, but you know what? There’s a simple explanation which demonstrates there’s no “horrors” necessary (save about his usual distortion of the facts).
Below is a breakdown of Social Security facts and figure in two columns. Column One lists figures for 1940; Column Two for 2002 (last year I could find complete figures for). Within each column are the numbers for the item listed at the left. So first, take a look at the info. (Some items have been rounded to whole figures.)
……………………………………………………….1940……………2002…………..
1) Average Annual Income………………..$1,299…………$36,764.
2) Average Monthly Income………………$108.25………..$3,063.67
3) SocSec Tax Rate…………………………1%…………….6.2%
4) Annual SocSec Tax……………………..$12.99…………$2,279.36
5) Monthly SocSec Tax……………………$1.08…………..$189.94
6) Avg Month Soc Sec Payout…………….$22.71…………$895.
7) Indivs. needed to meet payout…………..21…………….4.7
The point should be clear: yes, there are fewer workers meeting the payout in 2002 than there were in 1940 — not because the system’s in trouble but BECAUSE SALARIES ARE 28 TIMES HIGHER
Therefore, fewer input people are NEEDED per payout recipient. Granted, payouts are 39 times higher and the tax bite 6 times higher than in 1940, but there are still fewer people needed to meet the payout, and it will continue that way because, barring a depression (other than our daily one about Dumbya), salaries will continue upward (until they outsource all jobs). One would think Dumbya would be saying, “See, that’s a sign of a healthy economy,” but that’s another story.
One would also think the dimbulbs in the national media might have worked out the same numbers.
Any questions? See me after class.
Any holes in my analysis, please tell me. Otherwise, feel free to distribute material as widely as you like.
EDITOR’S NOTES:
1. As my dear departed Dad used to say “Figures don’t lie and liars don’t figure.”
2. If you find an errors in this assessment, please leave a comment here for myrln.

3 thoughts on “Social Security: Figures don’t lie. Liars don’t figure.

  1. W00t! Way to go, Myrln! Now, if we can just get the “dimbulbs” to clear out their electric wires a little so they will benefit from a bit more wattage.
    They are soft 40s and we need 100-watters up on the Hill. I think that used to be a requirement, back in Edison’s day.

  2. I’m not sure of the exact numbers,but try this logic. The average Social Security benefit is less than $1,000/mo. ($12,000/yr.) The meadian salary is about $40,000/yr. That is half of us make less than that and many more in the other half make considerably more. In fact incomes are probably highly skewed towards the high end. I’ve read that total of the top 20% incomes equals the total income earned by the bottom 80%! Thus 2 people’s combined income of $80,000 taxed at 15% is $12,000. Thus 2 can support 1! This does exclude medicare portion of the taxes, but the income skewness would more than take care of this! It would appear that to have 2 support 1 could be done with minor alterations to the program. The first that comes to mind is raising the cap to say $140,000. Or, extending the age for retirement; Republicans would like this because more people would die before they received anything! This is of course the reason the consented to Social Security in the 1930s. Not many were supposed to live beyond 65 in those days!

  3. It doesn’t work that way. Your analysis didn’t discount future payments into present value nor did you index for inflation or take account of the CPI. You also are reporting everything in nominal terms instead of real terms.
    It’s fine to criticize Bush’s plan, but anyone who seriously thinks that Social Security is not bankrupting itself is a fool.

Leave a Reply to Kate S. Cancel reply