So, which is Bush wrong about? (You can only pick one)

[Partha]

1. Bush claims that the Social Security fund will enter negative outlays at 2018 and be empty by 2042. This is contingent upon a growth rate in the US economy of 1.8%.

2. Bush claims that his tax and budget proposals will cut the deficit in half by 2009. To do this, he postulates a growth rate in the US economy of 3.8%.

(Historical note: US growth rate over history is between 3 and 4%.)

So, which is it? Is it anemic growth upcoming and he's lying about deficit reduction, or is it strong growth and his Social Security numbers are bupkis?

You make the call.

[Aabe]

Is there really a fund or is it just a tax revenue stream??

[Partha]

In theory, there's a fund. In practical terms, until we do something to reduce the debt, it's a tax revenue stream.

[Torakus]

Assuming that George is not an economist by trade, he is relying on numbers provided by his staff economists. Experience tells me that they are simply relying on proven economic models that call for worst case scenario numbers use when projecting status of programs uunder review and best case scenario numbers use when projecting status of economy based on current administration policy. It is definitely misleading for them to use both sets of numbers. Of course they are going to Chicken Little a program they want to change and then put on the Rosy Specs when discussing their own budget projections. But the day I see an administration do otherwise I will kiss your ass in the middle of Pennsylvania Avenue and bark like a dog.

Tora

[vaulos]

Actually, I think the simple explanation is that the first figure is calculated via real-dollar value, while the second is calculated independently of inflation. And, unless I'm seriously mistaken, inflation is about 2% a year, which would make those numbers work out. And before you make a mistaken statement, debt repayment actually is benefited by inflation, while saving programs such as Social Security are not. Thus the reason why the different calculations are important to the different questions.

Does that clear things up? Or do I need to go into how you calculate our GDP with and without inflation?

[vaulos]

No comment by Partha?

[Partha]

Looking for the specific language used.

[vaulos]

Well, I would doubt that Bush used the phrase "real-dollar"; first, because he isn't an intellectual, and second because he isn't much of a communicator. However, I will say that if the numbers for GDP (that he is using) are not altered in the way I am suggesting, then they are being rather foolish. But, it appears that Bush is indeed using the different numbers the proper way (even if by accident).

[Partha]

Well, I'm unsure what numbers he's using. While the 3.8 figure sounds right, in none of the three Social Security assumptions in the Trustee Report does the figure 1.8 come up - the numbers are (best to worst) .6, 1.1, and 1.6.

[vaulos]

But, what are those numbers being used to represent? GDP growth? Inflation? Estimated return on SS investment?

[Partha]

Estimated GDP growth after inflation.

[vaulos]

So Bush is overestimating the revenue growth of the status quo Social Security program? That doesn't sound right.

[Partha]

Which is, of course, the point of my post. Pulling numbers out of your ass don't make for good policy.

[vaulos]

No, I mean it doesn't make sense for him to be over representing them. If anything he should be under representing them.

[Partha]

You're assuming that he's discussing growth rates adjusted for inflation. Maybe he really believes that the economy will only grow by 1.8% irregardless of inflation. Of course, that puts the lie to his budgetary numbers, but once again, that's the point of my post.