As a follow up to my previous message to Tim Richardson in
 All_Politics, I will explain how social security is easily made
 solvent for the forseeable future.

 Economically easy, politically a battle to the death against the
 republican hatred for the working class.

 One pillar of current republican economic religion is the claim
 that the average portion of our economy made up of government
 spending has been 20% over the last 30 years. I won't bother to
 calculate out the details, I'll just accept that figure, since
 the real issue is not whether it's right, but why did they chose
 the last 30 years, instead of the last 35, or the last 60? Could
 it be because that would make their beloved republican
 presidents look so very very bad?

 Going back even into the Great Depression government spending
 stayed well below 20% of GDP, until WWII when the government
 took over almost half of the economy.

 Within two years after the war ended govt spending dropped well
 back under 20%, only rising to that level two years, 1953
 (Korean War), and 1968 (Vietnam War)... UNTIL... Nixon/Ford!

 Ford's two years, 1975/1976, to be precise. Even then it stayed
 in the 21% range, going down under Carter to the 20% range for
 most of his term... UNTIL... Reagan!

 Under Reagan govt spending went up to over 23% of GDP, and
 didn't see below 22% until his last two years. Under Bush I the
 economy played the Reagan gove spending game, fluctuatiing
 between 21% and 22% ranges, never seeing less than 21% UNTIL...
 Clinton!

 Clinton raised taxes on the rich and launched about the greatest
 period of economic expansion in the lifetime of any of us, and
 maybe the greatest in the history of this country. In doing so
 he moved govt spending as percent of GDP down from the
 Reagan/Bush over 21% to the 20% range, then down further below
 20% until Bush II inherited Clinton's low 18% range.

 Note, in no recent case did we cut our way to lower govt in the
 economy, but we grew our economy to reduce the govt portion.

 Now Bush inherited a spending level at 18.2% of GDP, and an
 economy that had seen massive growth. He ran govt spending up to
 19% of GDP, flirting with 20% of GDP and breaking that level,
 finally in his last budget he left the nation with govt spending
 at nearly 25% of GDP.

 The key to the solvency of social security is partly in that
 brief history of the US economy from the Great Depression to the
 Great Depressor. (GWB)

 Look at the Ryan/Republican plan. The idea is to fix government
 spending at 20% of GDP. Still much higher than much of the 20th
 century, but so what.

 Ok, next lesson. In 2003 the Bush Social Security Trustees
 released their report on the status of social security. They
 projected that, when the baby boomers retired in full force,
 social security spending would have to go from aprox 4.5% of GDP
 to aprox 6.5% of GDP. Remember, back in the early/mid 2000's,
 when I posted what I call "The 2% Solution"? Remember, it was
 based on that?

 Well, the current social security trustee's report shows very
 close to the same spending to make social security solvent
 through the baby boomer retirement era. And remember, the baby
 boomer retirements are a one time, temporary thing. Within about
 30 years the overwhelming majority of us (baby boomers) will be
 dead, and social security will go back to it's pre-baby boomer
 status.

 So, to get through that period without cutting benefits we need
 to move about 2% of GDP from other govt uses to social security.
 If we can get other govt spending back to the Clinton 18%, still
 high compared to much of the post WWII 20th century, the
 difference between that and the republican 20% is all it takes.

 Or, just give us the Reagan 22% and you can have the
 Ryan/Republican 20% for govt spending, and still solve the whole
 problem. Work out the details anywhere in between, it still
 works. Just 2% of GDP gives retirees the social security they
 were promised.

 Now, if we can get unemployment down to a real rate of less than
 5%, this all becomes a cakewalk. And if we can't get it down a
 whole lot from its current level, our problem is not retirement,
 but the survival of the United States above third world status.

 Work it out for yourself. It's not that hard. Other than
 breaking free of your inherent prejudices, that is.



BOB KLAHN bob.klahn@sev.org   http://home.toltbbs.com/bobklahn

... The problem is jobs... the solution is jobs...
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