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The latest example of this we-know-your-wallet-better-than-you ruse has been a series of commentaries in the Wall Street Journal, Washington Post andForbes by Andrew Biggs, a “resident scholar” at the conservative American Enterprise Institute, who was a deputy commissioner of the Social Security Administration under President George W. Bush (who repeatedly tried but failed to privatize Social Security).
“One persistent feature of the conservative attack on Social Security, and especially on the emerging campaign to increase benefits, is the notion that the typical American will do just fine in retirement just as it is,” wrote Michael Hiltzik, the Los Angeles Times’ Pulitzer-Prize winning business writer, summarizing this dubious line of attack as exemplified by Bigg’s Wall Street Journal piece, “New Evidence on the Phony Retirement Security Crisis.”
Bigg relies on an old Washington trick—the introduction of a new economic metric by congressional researchers that support a predetermined conclusion that ignores the reality faced by tens of millions of Americans. In this instance, it’s a new formula for calculating what’s called the “replacement rate,” or what percentage of one’s pre-retirement income will be dispensed in Social Security benefits. Economists typically say about 70 percent of one’s income is needed, of which Social Security is supposed to be one source.
“A typical middle-income individual born in the 1960s and retiring in the 2020s will be eligible for a Social Security benefit equal to 56 percent of his late-in-life earnings,” Biggs cheerily declares in the Wall Street Journal. “The CBO’s [Congressional Budget Office] Social Security figures, taken together with rising individual retirement savings, undercut the often-voiced claim that Americans face a ‘retirement crisis’ that only an expanded Social Security program can fix.”
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