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May 13, 2005

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But the private accounts also reduce the future obligations past the "insolvency date" as well. It decreases the size of the 75-year shortfall that would be closed because some of the money is getting diverted from the first 75 years to reducing benefit obligations in the 25 and 75 years beyond that.

It's really bad accounting to pretend that Social Security has absolutely no problem until the "insolvency date" that the costs finally exceed revenue, and then that once that date is reached the problems are absolutely insurmountable. But that's what your chart does.

Private accounts merely rearrange the debt-- they reduce future promised benefits (even outside that 75 year window) by also reducing current revenues. It can't be said to have a long term effect on insolvency-- except so far as they prevent the government from further cutting benefits later to make things solvent. If you're in favor of further benefit cuts past the President's plan, then I can understand being opposed to the accounts.

Your chart, and the CBPP's study, is more misleading than anything that the President has proposed.

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