Monday, September 05, 2005

Equus Mortuus 4

More Hyman phacts on Social Security, more Counterpoint reality:

Hyman Phact 7:

A marriage less than 10 years in length means no spousal benefits. Forty-three
percent of new marriages end in divorce. The typical first divorce occurs in
less than eight years. Seven years for a second divorce. You can be married for
a couple of decades in multiple marriages and never earn spousal benefits. The
divorce rate for black Americans is even higher than it is for whites.

Real Fact 7: Hyman’s point is virtually irrelevant. First, for a spouse to be left without Social Security benefits, he or she would have to be in an Elizabeth Taylor-ian number of marriages, each lasting less than ten years and ending in divorce without working themselves. While such a situation could exist hypothetically, it’s not realistic. More importantly, this is a situation that could be remedied (if deemed serious enough) with a slight change in the Social Security code. We can get Liz her benefits without scrapping the system (and privatizing the system would be no remedy for this situation, anyway). As an aside, it’s interesting that conservatives would criticize the Social Security system for not providing benefits for those who are in serial short-term marriages. Aren’t they the ones who want to “defend” marriage?

Hyman Phact 8:

The rate of return for today's young workers is so bad that the typical next
generation worker will actually receive less money in inflation-adjusted
benefits than he ever paid in. Investors often sue their brokers over negative
rates of return.

Real Fact 8: Hyman is simply wrong here, and is repeating a distortion voiced by the president himself. The charge that the rate of return for private accounts would be better than those of Social Security and would involve no more risk has been proven false by a study conducted by the Center on Budget and Policy Priorities. The study, vetted by a number of experts (including a Nobel-winning conservative economist), shows that the claims of substantially higher returns don’t figure in basic variables like the massive transition cost of privatizing even part of the system and don’t account for the additional risk. Finally, these claims don’t account for the fact that Social Security operates as an insurance policy for workers who die or are disabled. Factoring the additional costs of similar coverage under a private scheme add value that the simplistic “rate of return” claim fails to consider.

Hyman Phact 9:

In spite of paying into the system for a lifetime, you cannot pass your
retirement benefits onto your grandchildren. No one can inherit your

Real Fact 9: Survivors of a worker who dies early can collect from his or her benefits. A surviving spouse and any minor children are eligible to collect benefits. Moreover, the president’s privatization scheme only allows for partial inheritance of any money in an individual account. Most importantly, under the president’s plan, if you die and your privatization plan hasn’t done so hot (say, less than 3% above inflation), you will likely owe money to the system, and it is this debt (rather than any assets) that will be passed to your next of kin. And this doesn’t include the monstrous collective debt that we will all bequeath to the next generation due to the enormous cost of instituting a privatization scheme.

And those are the factual Counterpoints.

Hyman Index 2.04


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