As a follow up to my previous message to Tim Richardson in   
    All_Politics, I will explain how social security is easily made   
    solvent for the forseeable future.   
      
    Economically easy, politically a battle to the death against the   
    republican hatred for the working class.   
      
    One pillar of current republican economic religion is the claim   
    that the average portion of our economy made up of government   
    spending has been 20% over the last 30 years. I won't bother to   
    calculate out the details, I'll just accept that figure, since   
    the real issue is not whether it's right, but why did they chose   
    the last 30 years, instead of the last 35, or the last 60? Could   
    it be because that would make their beloved republican   
    presidents look so very very bad?   
      
    Going back even into the Great Depression government spending   
    stayed well below 20% of GDP, until WWII when the government   
    took over almost half of the economy.   
      
    Within two years after the war ended govt spending dropped well   
    back under 20%, only rising to that level two years, 1953   
    (Korean War), and 1968 (Vietnam War)... UNTIL... Nixon/Ford!   
      
    Ford's two years, 1975/1976, to be precise. Even then it stayed   
    in the 21% range, going down under Carter to the 20% range for   
    most of his term... UNTIL... Reagan!   
      
    Under Reagan govt spending went up to over 23% of GDP, and   
    didn't see below 22% until his last two years. Under Bush I the   
    economy played the Reagan gove spending game, fluctuatiing   
    between 21% and 22% ranges, never seeing less than 21% UNTIL...   
    Clinton!   
      
    Clinton raised taxes on the rich and launched about the greatest   
    period of economic expansion in the lifetime of any of us, and   
    maybe the greatest in the history of this country. In doing so   
    he moved govt spending as percent of GDP down from the   
    Reagan/Bush over 21% to the 20% range, then down further below   
    20% until Bush II inherited Clinton's low 18% range.   
      
    Note, in no recent case did we cut our way to lower govt in the   
    economy, but we grew our economy to reduce the govt portion.   
      
    Now Bush inherited a spending level at 18.2% of GDP, and an   
    economy that had seen massive growth. He ran govt spending up to   
    19% of GDP, flirting with 20% of GDP and breaking that level,   
    finally in his last budget he left the nation with govt spending   
    at nearly 25% of GDP.   
      
    The key to the solvency of social security is partly in that   
    brief history of the US economy from the Great Depression to the   
    Great Depressor. (GWB)   
      
    Look at the Ryan/Republican plan. The idea is to fix government   
    spending at 20% of GDP. Still much higher than much of the 20th   
    century, but so what.   
      
    Ok, next lesson. In 2003 the Bush Social Security Trustees   
    released their report on the status of social security. They   
    projected that, when the baby boomers retired in full force,   
    social security spending would have to go from aprox 4.5% of GDP   
    to aprox 6.5% of GDP. Remember, back in the early/mid 2000's,   
    when I posted what I call "The 2% Solution"? Remember, it was   
    based on that?   
      
    Well, the current social security trustee's report shows very   
    close to the same spending to make social security solvent   
    through the baby boomer retirement era. And remember, the baby   
    boomer retirements are a one time, temporary thing. Within about   
    30 years the overwhelming majority of us (baby boomers) will be   
    dead, and social security will go back to it's pre-baby boomer   
    status.   
      
    So, to get through that period without cutting benefits we need   
    to move about 2% of GDP from other govt uses to social security.   
    If we can get other govt spending back to the Clinton 18%, still   
    high compared to much of the post WWII 20th century, the   
    difference between that and the republican 20% is all it takes.   
      
    Or, just give us the Reagan 22% and you can have the   
    Ryan/Republican 20% for govt spending, and still solve the whole   
    problem. Work out the details anywhere in between, it still   
    works. Just 2% of GDP gives retirees the social security they   
    were promised.   
      
    Now, if we can get unemployment down to a real rate of less than   
    5%, this all becomes a cakewalk. And if we can't get it down a   
    whole lot from its current level, our problem is not retirement,   
    but the survival of the United States above third world status.   
      
    Work it out for yourself. It's not that hard. Other than   
    breaking free of your inherent prejudices, that is.   
      
      
      
   BOB KLAHN bob.klahn@sev.org   http://home.toltbbs.com/bobklahn   
      
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