Brilliant! We need more economists like Baker who aren't afraid to call out this BS nonsense. Wish reporters would interview him instead of CATO and Heritage...
February 9, 2011
The Honorable Richard Shelby
304 Russell Senate Office Building
Washington, DC 20510
Dear Senator Shelby:
During a recent breakfast at the Institute for Education, you said that Social Security is actuarially unsound, that the next generation of workers would receive little or nothing from Social Security and that there is no proof that your sons would get much at all. This is badly mistaken. You should know, both for your own personal finances, and more importantly for your actions as Senator, that under any plausible set of circumstances you and your sons can anticipate a substantial Social Security benefit.
You reached the national retirement age for Social Security in 1999. While I don’t know your precise earnings history, your pay as a senator made you eligible for the maximum benefit if it were sustained for 35 years. The Social Security Trustees Report and likely your own personal finances show that a maximum wage earner retiring in 1999 receives an annual benefit of $21,674 in 2010 dollars.
The trustees’ projections show that if nothing is ever done, then Social Security would pay full benefits through the year 2037. At this point, even if Congress does nothing there still would be substantial money flowing into the program, allowing the program to pay just under 80 percent of benefits. In the case of your youngest son, he would receive $29,700 from 2037 on (in today’s dollars), if his lifetime earnings path is similar to your own (i.e. he is a maximum wage earner).
As can be seen in Table V1.F2 of the Trustees Report, Social Security’s revenue in 2040 will be equal to 13.23 percent of covered payroll, while its outlays are projected at 16.64 percent. This would be sufficient to pay 79.5 percent of scheduled benefits.
Social Security’s finances are actually projected to improve slightly over the next decade so that the program would be able to pay 81.0 percent of scheduled benefits in 2050. For your son, this would be a benefit of slightly over $30,000. The situation is projected to change little in subsequent years. This means that your youngest son should be able to get a benefit of roughly this size for as long as he lives, even if Congress never does anything to eliminate the shortfall in the program. Again, these sums are all adjusted for inflation.
The Rest of the Letter:
http://www.cepr.net/documents/publications/shelby-ss-2011-02.pdf
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