Thursday, April 14, 2005

FactCheck and Senator Reid's Calculator

Yesterday's update from FactCheck.Org pertains to the assumptions in the Social Security calculator found on Senator Reid's (and other Democratic Senator's websites). I posted about this in February when the calculator first appeared. I listed five things that I thought were missing from the website if its intent was to be a constructive part of the debate on Social Security reform. The post also had some useful back and forth in the comment section. It's worth another look.

Elsewhere in the blogosphere, we Outside the Tent takes FactCheck to task, and Armchair Genius is sympathetic to FactCheck's points.

Other blogs commenting on this post

6 comments:

PGL said...

Let's say Barro and Becker are right in their claim that reshuffling assets from one account (the SSTF) to another (my 401-K) does not change asset allocation. Then Sen. Reid has not underestimated the returns to these private accounts - he has overestimated them. I guess FactCheck does not understand basic financial economics.

PGL said...

Noted both this post as well as your earlier one. Your four critique of the Reid calculator suggests individuals will take the opportunity to invest some of their privatized Soc. Sec. funds into higher expected return (and higher risk) stocks. Barro and Becker have both suggested folks already do take the optimal return and risk position adjusting their private accounts. I have said the same thing. So what is wrong with the Barro-Becker view here?

Mark Thoma said...

I received this email a day or so ago so I'm glad this topic is being discussed. I will respond by sending them here. Here's part of the email:

Is there any rebuttal to this?
http://www.heritage.org/press/dailybriefing/policyweblog.cfm?blogid=3C27D6AD-DD8D-7B2B-3F82CBB485C6F3F3

Factcheck.org: Reid's ''Rigged'' Calculator

and the more primary link:
http://factcheck.org/article319.html

PGL said...

Mark: Heritage might read Robert Barro's 7/3/2000 Business Week oped or Gary Becker's 2/22/2005 WSJ oped. Of course, I have made the same argument many times as has many other economists. E.g., read Andy Abel's Introduction to his 2001 American Economic Review paper. The folks at Heritage know their spin has been rebutted by serious economists (including conseratives like Barro & Becker). But they just choose to ignore real economics as they have snakeoil to sale.

Mark Thoma said...

Sorry for the long address above - it looked fine in the preview...

sandy said...

I just read your October comments about Kerry's remarks on SS. Turns out, Bush did have a privatization plan, just like Kerry said he did. Bush's plan will cost 2 trillion dollars. Privatization won't do anything to make social security solvent, which would mean cutting benefits up to 40%.

So excuse me if I don't get all in a tither about what you or Factcheck has to say on the subject.