Last week the Washington Post again editorialized in favor of reforming the Social Security disability program by either reducing benefits and/or raising disability requirements. The editorial noted the reallocation of funds from the Old Age and Survivors Insurance program to the Disability program twenty years ago and told readers;

"The last tax reallocation, 20 years ago, 'was intended to create the time and opportunity for such reforms,' as the Social Security trustees’ report puts it; it would seem that the time, and the opportunity, are finally here."

In fact, it is not clear that there is any fundamental problem with the disability program that requires reform. If we go back to 2008, before the collapse of the housing bubble brought the economy to its knees, the disability program was in far better shape. It was projected to be able to pay scheduled benefits through the year 2025. Its projected shortfall over the program's 75-year planning horizon was just 0.24 percent of covered payroll or just over 12 percent of the program's projected revenue.

But even this projected shortfall was largely due to something that had been unexpected back in 1983 when the Greenspan commission made their recommendations to Congress for reforming Social Security. The commission had expected that 90 percent of wage income would be below the tax cap set at the time and therefore subject to Social Security taxes. This turned out to be mistaken as there was a sharp upward redistribution of wage income in the 1980s which continued into the next two decades. As a result, the program took in considerably less revenue than had been projected.

The figure below shows the difference below shows the difference year by year between the revenue the program would have received if 90 percent of wages had been subject to the tax and the revenue actually collected by the Disability Insurance (DI) trust fund. (The calculations also add in 6 percent interest on past revenue, which was roughly the interest rate on government bonds at the time.)

It really is amazing how the self-proclaimed intelligent people (in contrast to those who make "idiotic" arguments) are prepared to make arguments that are totally protectionist in their nature in support of the Export-Import Bank. Joe Nocera gives us a parade of greatest hits in his column today.

He starts by telling us that the Ex-Im "supports tens of thousands of good American jobs." Guess what folks? If we had a tariff on imported cars, the tariff would also support tens of thousands of good American jobs.

But wait, Nocera goes on to tell readers:

"The Ex-Im Bank that in its last fiscal year generated enough in fees and interest to turn over $675 million to the Treasury. Why would anyone in their right mind want to put such a useful agency out of business?"

Let's see, last time I looked tariffs also raise money. So Nocera convinced me, we should support tariffs on cars -- of course that would only be true if he were intellectually consistent.

Mark WeisbrotIntereconomics, July 29, 2015

July 30, 2015 (GDP Byte)

July 30, 2015

August 2015, Franklin Serrano and Ricardo Summa

Dean Baker
Al Jazeera America, July 29, 2015

Dean Baker
Truthout, July 27, 2015