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I set the scene and tell the three-fold story below.

The first image is from CBO's 2012 Long Term Projections for Social Security. The second from a CBO Report titled The Future Growth of Social Security: It's Not Just Society's Aging. Together they tell a story, or rather a set of stories, one each from each of our Protagonists.

The Actuary has the simplest story. He sees a projection of total tax revenue, through his standard 75 year scoring window. He also sees a projection of outlays under current law formulae. Then overlaid on both is a solid line representing payable benefits with the continuation beyond the point where tax income trails cost being enabled by redemption of Trust Fund assets. He understands that under current law the Social Security Commissioner is mandated to pay full benefits as long as income and assets allow but has no legal authority to borrow after assets are exhausted. And the result is a sudden discontinuity as then current benefits are cut 25% to meet then current tax income, leaving the whole system in actuarial imbalance.

The Defender's story is one of impending tragedy, that arithmetic discontinuity the Actuary sees is for her one of a drastic overnight cut in benefits.

The Reformer sees something closer to tragi-comedy coupled with a dangerous risk. For him the scheduled benefit was always a over-promised chimera, an unsustainable system where the danger is that beneficiaries will demand scheduled benefits be paid come what may.

These three stories have significantly different resolutions. The Actuary's story resolves itself. Scheduled benefits are simply a projection and the Supreme Court has ruled that individual beneficiaries have no ownership rights in any given level of benefits, from a legal perspective there is no such thing as an 'unfunded liability'. For one thing there is no legal liability, for another the reset in benefits elminates the unfunded piece, payable benefits continue to be payable, just at a lower level.

The Defender though is implicitly committed to scheduled benefits and a successful resolution can only be accomplished by twisting the revenue line up to move payable to match scheduled.

On the other hand the (so-called) Reformer is not committed to Social Security at all and its pending failure is simply something to be mitigated and managed in a way that limits calls on revenue outside the current law revenue stream. After all why should HE pay for soft-headed liberals pie in the sky?

The result is mutual incomprehension. The Defender sees a moral imperative to maintain benefits, it is a simple combination of equity and 'Honor Thy Father and Thy Mother'. On the other hand the Reformer simply sees a challenge to be managed in the most efficient way possible, or at least the one that creates the least possible financial and political risk. Where the Defender sees Chained-CPI as putting Gramma in the Catfood aisle, the Reformer sees it as the closest thing to a friction free fix to the political challenge. Just a tweak. Hardly noticeable.

At this level of the dueling narratives there can be no meeting of minds, the Reformer simply being blind to the issue of equity that so motivates the Defender, "If Wishes were Fishes we would all cast Nets".

Now personally I fall pretty squarely on the Defender side. I curate the dKos Social Security Defenders group, my e-mail for these purposes is SocSec dot Defender at GMail, and I just reactivated my own blog called (natch) Social Security Defender. On the other hand I wear a second hat as a film critic, err Social Security policy wonk, and cannot ignore the additional story-line set up by the second graphic above. Which shows scheduled benefits set to almost double in real terms over the next seventy-five years. But this isn't some pure giveaway, it simply reflects the projected improvement in overall real basket of goods for the population as a whole (at least on average). All it means is that the gramma of 2060 would get the same proportional slice of national income pie as the gramma of 2012, just from a larger pie. And while the cumulative share of all the grammas of 2060 is a slightly larger slice of that pie (from just under 5% of GDP to just over 6%) this simply reflects the fact that SS beneficiaries project to increase from 14 to 25% of the population. Meaning the only way to keep SS as a constant share of GDP is to comparatively take slivers away from the growing pie slice.

Which does raise a little complication to the neat black and white story of the Defender. Because when you combine the two graphs and run the numbers the end result, even if we do Nothing and have the gramma of 2035 take a 25% overnight cut in benefits both she and her daughter of 2060 STILL end up with a bigger slice of pie than 2012 gramma. As for me I believe that 2035 gramma shouldn't have to take a smaller slice, she will have deserved every bit of the scheduled benefit and we should take whatever steps are needed to push the payable line up to the scheduled line.

But as a pure matter of arithmetic Chained-CPI does not mean Catfood. While it is a cruel deprivation of earned benefit and a violation of every principle of moral equity, to say nothing of the Sixth Commandment, in real terms is still adds up to Pie. Or in less fanciful times still resolves as splitting the difference that is shown in Figure 3 above.

Originally posted to Social Security Defenders on Mon Dec 31, 2012 at 10:37 AM PST.

Also republished by Community Spotlight.

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