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View Diary: The Three SS 'Alternatives': Economic Projections, Uncertainty, Probability (25 comments)

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  •  Biggest knock on Low Cost (3+ / 0-)
    Recommended by:
    Clem Yeobright, Just Bob, joanneleon

    Low Cost and High Cost are designed on an acknowledged artificial model that has all variables favorable to solvency or alternatively detrimental move one way or the other. The result is that it is easy to nitpick Low Cost by point out that variables 5 and 8 are unlikely to improve that much. Well fine, so you don't get quite as much contribution from that particular variable. On the other hand some Low Cost numbers seem awfully anemic considering they are supposed to be somewhere near the outside of the probability band. I mean is 1.8% productivity really pie in the sky?

    The point is that any movement on any of the variables towards or beyond the Low Cost data point serves to improve solvency and everything has to perform down to Intermediate Cost to preserve that particular actuarial gap. Meaning the cherry picking can work both directions.

    Let the harvest begin!

    socialsecuritydefender.blogspot.com - SocSec.Defender at gmail.com - founder DK Social Security Defenders group - (hmm is there a theme emerging here?)

    by Bruce Webb on Wed Mar 27, 2013 at 02:34:31 PM PDT

    •  Do you have numbers on the effect of a $10.10 (0+ / 0-)

      minimum wage - ideally one that's indexed - enacted in the very near future?  I'm thinking it puts at least one 'high-cost' factor value beyond the realm of possibility.

      Does Congress (Congressional staff, I guess I mean) read these tables for what they say to me? To wit:

      Hint hint: Deal intelligently with this matter and that matter and you'll never have to mess with the third rail at all, ever.

      Too late for the simple life, too early for android love slaves - Savio

      by Clem Yeobright on Wed Mar 27, 2013 at 02:50:31 PM PDT

      [ Parent ]

      •  No I don't. Look to CBO for that kind (3+ / 0-)
        Recommended by:
        Clem Yeobright, aliasalias, Zinman

        Of score.

        CBO deals with those kind of hypotheticals, SSA OACT mostly not. And I don't run my own economic numbers anyway. As I like to say I am a Number Pointer and not a Number Cruncher, I take what SSA and CBO give to me and work out the implications using two tools I like to call 'logic' and 'ninth grade math'.

        You want those kind of calculations you need to address your questions to Dean Baker. Who seemingly can generate the resulting number series right off the top of his head. Or Paul Van de Water at CBPP, who is not just a top grade economist but also held top, top positions at both CBO and SSA (he was Principal Deputy Commissioner at the latter, or the no 2 guy)

        socialsecuritydefender.blogspot.com - SocSec.Defender at gmail.com - founder DK Social Security Defenders group - (hmm is there a theme emerging here?)

        by Bruce Webb on Wed Mar 27, 2013 at 03:06:19 PM PDT

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        •  Roger that. I'll see what I can find. (0+ / 0-)

          [Testing testing: is this thing working?]

          I've waited in anticipation of this diary since Monday morning and I sure thought I wasn't alone in that.

          It's everything I expected, Bruce, so it's definitely not your fault. SS fatigue? Go figure ...

          Too late for the simple life, too early for android love slaves - Savio

          by Clem Yeobright on Wed Mar 27, 2013 at 03:24:42 PM PDT

          [ Parent ]

      •  With 5% unemployment (2+ / 0-)
        Recommended by:
        Clem Yeobright, Zinman

        $9.50 an hour would impact 32 million people and increase FICA by 5-6 billion per year. Based on some 2006 numbers that dont apply to todays 14.7 U6 rate.

        Okay thats a bit of a stretch, call it strictly BOE.

         photo wagedistributation2006.png

        ...... Social Security blogathon March 25th thru March 29th. #HandsOffmySS FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

        by Roger Fox on Wed Mar 27, 2013 at 08:10:46 PM PDT

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        •  What part of 75-year projections is NOT BOE? (0+ / 0-)

          Thanks for the chart.

          Too late for the simple life, too early for android love slaves - Savio

          by Clem Yeobright on Wed Mar 27, 2013 at 08:16:00 PM PDT

          [ Parent ]

          •  Well it is not quite BOE (2+ / 0-)
            Recommended by:
            Zinman, Clem Yeobright

            (which took me a minute to figure out was 'back of envelope')

            If you examine the first Table in the post you see that all three projections settle out on 'ultimate' numbers about 10-13 years out for most of their economic and demographic variables. That is they don't even pretend to predict future decades economic performance but instead project a kind of carrying capacity of the economy in a Three Bears kind of way-Low Cost being Too Hot, High Cost Too Cold and Intermediate Cost some sort of bastard Golilocks/Baby Bear Just Right Porridge.

            Which raises a couple of questions. If the uncertainty is such that you can only project variation between top and bottom performance some 15 years out, exactly what is the justification for using 75 year numbers as your policy touchstone? If we know anything it is that there will be ups and downs in  economic performance in decades 3-7 from now and fundamental technological change, to assume we are confident not only about the upper and lower bounds (Low Cost and High Cost) but that we are confident enough that performance will always revert to the mean (Intermediate Cost) that we should handcuff ourselves to projections of the latter in formulating near term policy is frankly somewhere between daft and witchcraft, the very existence of 'ultimate' numbers just over a decade out being a kind of confession of impotence.

            Worse it builds in a further impotence argument, this one of the possibility of changing the future via targeted policy. That is Intermediate Cost builds in some sort of bastard NAIRU that there actually are natural limits, limits which we will reach one way or another in the next 15 years and be helpless to change.

            Well not much room for the Magic of Capitalist Entrepreneurship and Good Old American Know-how there. If we don't like perma-Intermediate then the answer is not to just surrender and send the Poors and Olds to the Catfood aisle but maybe to launch a Newer Deal in pursuit of a Greater Society.

            Which isn't to deny categorically that there are not real upper and lower bounds that may or may not correspond to Low Cost and High Cost, but almost by definition outcomes closer to Low Cost than Imtermediate Cost are POSSIBLE. Hence the stochastic and other tests in the Reports. We don't have to target the stars, just maybe an outcome in the 85-95 range.

            socialsecuritydefender.blogspot.com - SocSec.Defender at gmail.com - founder DK Social Security Defenders group - (hmm is there a theme emerging here?)

            by Bruce Webb on Wed Mar 27, 2013 at 08:47:47 PM PDT

            [ Parent ]

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