Social Security: The Phony Crisis

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The sky isn't falling on Social Security, say economists Dean Baker and Mark Weisbrot in this readable but sophisticated defense of America's popular government-run retirement program. The public suspects Social Security won't be solvent in the 21st century, they continue, because of "an avalanche of misinformation, disinformation, and powerful political and financial interests." The authors are both liberal economists, and they believe that the privatization of Social Security favored by many libertarians and younger Americans would involve great risk and possibly destroy a system of entitlements that has rescued millions of retirees from spending their golden years in poverty. Although they admit the stock market has averaged a 7 percent rate of return over the last 75 years--much higher than anything Social Security can claim--there is no way to predict what will happen in the future; mandatory private investment programs favored by many free-market reformers therefore offer false promises. Only Social Security, say Baker and Weisbrot, provides a guarantee of income for the elderly. Along the way, Social Security: The Phony Crisis discusses the history of Social Security and evaluates several of the reform proposals now on the table in Washington. A constant drumbeat in favor of the status quo will guarantee this book's popularity among liberals. --John J. Miller


From Booklist
Baker and Weisbrot take issue with widespread dire predictions that the 64-year-old Social Security system will not be able to provide financial security for the aged and disabled in the future. Baker, a senior research fellow at the Century Foundation and the Preamble Center, and Weisbrot, a research director at the Preamble Center, project that Social Security will remain viable for at least 30 more years--longer if the U.S. economy continues to grow at its current pace. Concerns about a shortfall that will transform economic class warfare into "intergenerational conflict" are outright lies, according to the authors. Doomsayers have misinterpreted demographic trends and mistakenly lumped together Medicare and Social Security when estimating the financial burden on the government, the authors claim. Baker and Weisbrot offer an interesting viewpoint in the controversial debate about Social Security--one that is certainly more welcome than the typical predictions of a shortfall. Vanessa Bush


From Kirkus Reviews
What if the predicted collapse of Social Security is only doublespeak and all the Chicken Little economists' warnings just prodigious flummery? Social Security is truly healthy, say Drs. Baker and Weisbrot, both of Washingtons Preamble Center. It simply doesn't need the dire purgatives the putative experts prescribe. There is no dispute about the figures, statistics, or projections cited by the prognosticators when they spy a shortfall along about 2034. But the authors challenge basic assumptions with vigor and intelligence. They question the methodology and even the intentions of those who would renounce the remarkable success of America's great social-insurance program. The advertised deficit in the Social Security fund over the next 75 years, they note, is based on a projected rate of growth that's less than half the last 75. Social Security bookkeeping should be isolated from that of Medicare (which is funded in large part by general revenues). The supposed overstatement of the consumer price index, discovered by experts with their own agendas, may be way off base after all. (At any rate, an adjustment of the CPI would clearly improve the dire predictions for all social programs.) The privatization of the national retirement systempromoted, naturally, by Wall Streetwould wreak havoc, based as it is on clearly untenable assumptions over any reasonable period. Demographics show that intergenerational warriors promote a false, poisonous cause. All in all, say economists Baker and Weisbrot, it's not an honest debate. Let's talk about the real problems, they urge. The environment is inexorably deteriorating, the gap between rich and poor is widening, and the rising cost of health care is of paramount concern for the future. So calm down, policy wonks. Let Grandma alone. Your own retirement will be fine if it you let Social Security alone. Its future is brighter than the pundits and politicos would have us believe. An absolutely relevant and important analysis, presented with force and clarity, that asks, basically, what kind of a nation we really are. -- Copyright ©1999, Kirkus Associates, LP. All rights reserved.


Book Description
Is it true that the Social Security system is in serious trouble and must be repaired? As baby boomers begin to retire, will they inevitably, by force of their sheer numbers, bankrupt the system? Is Social Security a big Ponzi scheme that will leave future generations with little to show for their lifetime of contributions? Is the only way to solve the Social Security crisis through radical changes like privatization or bolstering it with massive new taxes?

According to the authors of this important new study, the answer to these questions is a resounding no. In Social Security: The Phony Crisis, economists Dean Baker and Mark Weisbrot argue that there is no economic, demographic, or actuarial basis for the widespread belief that the program needs to be fixed.

As the authors emphasize, there is virtually no disagreement about the facts of Social Security's finances, or even the projections for its future. Rather, the Social Security debate has been foundering on misconceptions, confusion, and lack of agreement on the meaning of crucial terms.

The authors also take on related issues: that privatization would help save Social Security, that America has a pressing need to increase its national savings, and that future generations will suffer from the costs--especially for health care--of supporting a growing elderly population.

As New York Times columnist Fred Brock recently wrote, "So-called reform of the Social Security system is looking more and more like a solution in search of a problem." In this accessible and insightful work, Baker and Weisbrot seek to cut through some of the myths and fallacies surrounding this crucial policy issue.





Book Info
Discusses the history of Social Security and evaluates several of the reform proposals now on the table in Washington. A constant drumbeat in favor of the status quo will guarantee this book's popularity among liberals. Softcover. Hardcover available.


From the Inside Flap
The debate over Social Security reform continues, but few participants ask one basic question: does Social Security really need to be reformed? This eloquent, sophisticated book smashes away the rhetoric of the Social Security "crisis" to answer with a resounding "no," offering a clear and compelling defense of a system that's not nearly as troubled as many would have us think.



About the Author
Dean Baker and Mark Weisbrot are codirectors of the Center for Economic and Policy Research (www.cepr.net).



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� A devastating critique of those who say social security is going broke and that something drastic needs to be done� a succinct, easy-to-read, and fact-packed economic and logical rebuttal to the assault on social insurance. — Joe Matzzie


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