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22 of 22 people found the following review helpful
5.0 out of 5 stars Impeccable and Typical of the CEPR
There are some reviews listed by people who seem to be under the spell of the illusory "free markets." They seem to think that putting "must-have" money into risky investments like the stock market is a great idea. They are missing an important statistical fact when they quote the return on the US stock market, and that is that any average you calculate for a given period...
Published on June 2, 2007 by Shaun Snapp

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8 of 25 people found the following review helpful
3.0 out of 5 stars Not the whole story
Baker and Weisbrot make a good presentation of their argument -- that social security really isn't in a crisis. But their efforts to make it readable also mean that many important numbers are left out -- e.g., how fast will the economy have to grow for the crisis to be avoided,what is social security's return compared to stocks and bonds, etc. At the end of the day, most...
Published on September 29, 2000


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22 of 22 people found the following review helpful
5.0 out of 5 stars Impeccable and Typical of the CEPR, June 2, 2007
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This review is from: Social Security: The Phony Crisis (Paperback)
There are some reviews listed by people who seem to be under the spell of the illusory "free markets." They seem to think that putting "must-have" money into risky investments like the stock market is a great idea. They are missing an important statistical fact when they quote the return on the US stock market, and that is that any average you calculate for a given period will be less for non-elite investors. Through insider trading and superior knowledge, better off investors do far better than non-elite investors. This has been conclusively demonstrated by research into 401k returns and is called the "yield disparity." It is one major reason, in addition to companies contributing less to 401ks than they did to pensions, why so many people's retirement in the US is at risk. Furthermore, all the major investment banks know this, and they are still pushing for to take over the social security system for their own purposes.

As far as calling the authors left wing or crackpots. I can tell you the work done by Dean Baker and by the Center for Economic and Policy reseach is some of the best economics done in the country. They are one of the few economic institutes of note who have not sold out to large power interests. If you sit in the top 2% of wealth in the country, go ahead and call them names. You need to, because their facts can not be argued away so easily. However, the rest need to wake up. If you are part of the rest of population (the other 98%) of the country in income and agree with Social Security "reform" you either don't know what is intended for Social Security (i.e. handing it over to wall street) or did not understand the arguments expressed in this book.
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44 of 51 people found the following review helpful
5.0 out of 5 stars Excellent antidote to scares and schemes., May 2, 2000
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This book is a very welcome antidote to claims that Social Security is fiscally unsound and would well be privatized. The authors, economists, cite relevant facts to support their cogent arguments. The usefulness of this book in making clear some major Social Security issues compares very well with books by Robert Eisner (Social Security, More Not Less, and The Great Deficit Scares: the Federal Budget, Trade and Social Security) and with Countdown to Reform, by Henry Aaron and Robert Reischauer. Baker and Weisbrot's book also has valuable information and arguments on health care and other important issues.
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51 of 62 people found the following review helpful
5.0 out of 5 stars Don't FIX what ain't BROKE!, July 23, 2001
By A Customer
Social Security PRIVATEERS tell us that in 2029.or 2032...now 2050 (notice that the date has to be constantly readjusted BACK every year) it is "calculated" by a Government advisory commission that Social Security won't have enough income to cover more than 75 percent of the benefits it must pay to aging baby boomers.
But the authors point out, the specificity is illusory, all lever-pulling and smoke-blowing from the Wizard of Oz. The projections aren't economic but actuarial extrapolations based on assumptions that the all the actuaries know are fictitious at best. Tweak them ever so slightly--lift real wages by a quarter- or half-percent per annum, or immigration by a little--and the so-called "crisis" disappears entirely. But according to the apparat-niks at the CATO Institute and the attack dogs at the OUT-Fox-ed Network--you might think the numbers have come down from Moses. They haven't. Social Security isn't in trouble and the criticisms of it are not logical as the authors of "The Phony Crisis" point out.
First of all, Social Security is an INSURANCE System, not an "investment". When you factor in the cost of buying disability and survivor insurance and "invest the difference"...the performance "advantage" of equity markets gets razor-thin at best. It turns out that Social Security yields the same as nice safe government bonds, which any intelligent investor knows should form the basis of an investment portfolio.
Secondly, the so-called performance advantage of the markets has a whole lot of IFs that the PRIVATEERS conveniently fail to mention.
Forget hyper-collapse 1929-style for the moment. Since the Crash of October 1987, U.S. markets have been on a nonstop charge; but if you'd gone into the same markets in 1970, you were worse off by 1980--not to mention where you'd be today if you'd bet on Japan in the mid-eighties or Southeast Asia's "sure thing" markets a couple of years ago. Will you do all right in the long term, as brokers and economists insist? Well, probably yes--but then as Keynes observed..."in the long run, we're all dead."
Here's where the income and wealth distribution effects of privatization turn very ugly. For millions of Americans--who bet on Kaypro instead of Microsoft (oops), Pan Am instead of American (sorry) or cattle futures without the skill and connections of Hillary Clinton (smile, please)--life at 75 could mean not "golden years" but working for the folks at the golden arches, or even being out on the street. A FACT of life that the young people who invested in the dotcom bubble are learning the hard way.
How many of us realistically will beat the averages? If 120 million workers are turned loose to bet the markets---40 million of whom are marginally literate or numerate--as the privateers recommend---it turns out that most will lose. The mutual fund industry's dirty little secret is that three-fourths of funds under-perform market indexes. Yet such funds have millions of naïve investors in them; in one recent survey, a majority of mutual fund investors couldn't even distinguish between a "load" and a "no-load" fund.
There is another issue, so far undiscussed in the debate. For the first time in nearly thirty years, the federal budget's in balance. But it's in balance because each year the Treasury borrows $80 billion from the Social Security Trust Fund surplus, and "covers" the deficit in the rest of the federal budget. If a big piece of Social Security contributions go into private accounts, the trust fund surplus will disappear and the federal budget will plunge back into deficit. Which federal programs are we supposed to cut to make up for it?
If you count the cost of the so-called "free market reforms" over the past twenty years--to a once-viable savings-and-loan system, to Mexican workers and peasants (who've paid for bailouts not once but twice), to the world's poor as they've worked off the global debt crisis. Think about the lives of Indonesian peasants, or Korean and Thai workers today--all set to pay for the "can't miss" marketization of Southeast Asia, just as Americans have so wonderfully benefited from downsizing, capital-gains reduction and globalization.
The folks that brought you ALL these disasters are the ones telling us that now it's Social Security's turn to face the "free market reform" just because it doesn't meet the ideological test of a handful of right-wing zealots.
Social Security is not a disaster. Benefits are moderately progressive, meaning that the bottom 60 percent of retirees get more back than they paid in. More than 90 percent of us pay into it during our working lives and more than 90 percent of us can count on its benefits when we retire. The minor adjustments that are outlined by the authors are all that is necessary to save Social Security.
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25 of 30 people found the following review helpful
4.0 out of 5 stars An excellent and valuable book, December 9, 2004
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This review is from: Social Security: The Phony Crisis (Paperback)
I have a very high regard for the quality of Baker's and Weisbrot's work and professionalism after reading this book (and subsequently, other publications of theirs). My only complaint is that, having been written in 1999, it is a tad out-of-date and needs revision in order to keep pace with the state-of-the-art anti-social-security spin. For instance, the reviewer from Greenbelt, MD invokes what is now a hoary old chestnut but which was a novel if misguided argument in 1999, that the social security trust fund "does not exist" because it consists of IOUs that the "government has written to itself". In other circles, these "IOUs" are known as treasury bonds and are sold to many other individuals, banks, businesses, and nations, besides being sold to social security beneficiaries by way of the trust fund. These other investors do not doubt that they will be repaid. Why should we?

Furthermore, a blinkered analysis that regards debt instruments such as bonds as fundamentally riskier than "real assets" such as (I presume) real estate, stocks, and other equities is not only to ignore cases where land values crater, stock markets collapse, and companies go bankrupt, but also to willfully invert the relationship between risk and reward. No investment counselor would do this, for instance.

In any event, Baker's and Weisbrot's book illuminates issues like these with a bracing clarity (albeit with a little dryness). I highly recommend it.
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24 of 30 people found the following review helpful
5.0 out of 5 stars The Truth Shall Set You Free, November 30, 2004
Social Security has benefited tens of millions during its first sixty years. It provides security in an otherwise insecure economy. This is why it has enormous public support. It is threatened by the deceitful lies and misinformation from a propaganda campaign designed to damage or destroy it. The authors provide the basic facts to inform people of the truth about Social Security. The greatest threat to Social Security come from those who want to destroy it in order to save it (or so they say).

The 'Introduction' says the forecasts of a shortfall for future generations is based on the assumption of an annual growth rate that is half the rate recorded over the past three decades. If the current growth rates do not fail, the system would never run short of money (p.1). The truth is that class warfare has resulted in a real decline in pay since President Reagan took office (p.2). This has created a malaise in people's expectations, due to the well-orchestrated political arguments against Social Security (p.3). This attack lumps Medicare with Social Security to project a huge deficit. But it is Medicare that has the problem due to the lack of cost control (which would be solved by Universal Health Care). Social Security will produce annual surpluses for decades (p.5). America spends twice as much on health care as Sweden, yet Sweden has a much higher percentage of people over 65 (p.6). Sweden has "socialized medicine" and no corrupt Health Maintenance Organizations.

The Bubble in the Stock Market has burst, and destroyed the arguments of those who want to loot Social Security (p.7). But faster growth rates eliminate shortfalls in Social Security (p.8). Stocks are only valuable if there are profits and dividends. If prices rise, they will fall when there is no rise in the underlying assets. The real truth is that privatized accounts would earn about 2.5% (p.9)! Those who claim investing small amounts over decades will create great wealth have never done so, nor can they point to anyone who has ever done so. Its all just a fantasy.

The idea of raising the retirement age is crazy, given the class lines of life expectancy, and the increasing policies of dumping older workers who must retire at 62 (p.10). Another regressive policy is cutting the cost of living adjustment, which is needed for devalued dollars (p.11). The declining real wages refute this crackpot idea of the Boskin Commission (p.12). Social Security is the largest and most successful antipoverty program. It provides a guaranteed annuity that is inflation resistant, unlike many pensions (p.13). Social Security is most efficiently administered (no private mismanagement). Social Security is more important than ever due to the class warfare from the 1980s. Employer pension plans are going away, and regressive tax laws reduce private savings for retirement (p.14).

The proposed cuts to "fix" Social Security are shown to be neither just or justifiable, or even necessary. The high 6.2% tax rate (really double that) is being used to lower taxes on the super-rich. Wall Street pays for this propaganda campaign (p.16). Much has been said about deficits, but little about the problem of increasing inequality in the distribution of income (p.17). The national debt is a trick where the many are taxed to benefit the few super-rich. The rest of this book covers the "phony crisis" in detail.
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7 of 7 people found the following review helpful
5.0 out of 5 stars Detailed and comprehensive statement of economic fact, November 22, 2006
This review is from: Social Security: The Phony Crisis (Paperback)
I have often heard the jeremiads about social security that through shear repetition hope to gain acceptance. Most significantly we hear that demographics doom social security as the large aging population will dwarf the new workforce and push it into bankruptcy. Baker and Weisbrot use detailed actuarial and labor force statistics to demonstrate that increases in average worker income will more than offset the increases in future recipients. Perhaps Italy and Japan will have those issues but Americans have more children and more immigrants and we shall have sufficient workers to cover the costs of benefits. Why don't the conservative forecasters suggest that we raise the maximum incomes for SS tax if they are concerned about its solvency. I do not want to repeat the arguments of Baker and Weisbrot since they state the case so effectively. The other amazing aspect of the book is that it applies so well to the 2005 privatization debate even though it was writter 6-7 years earlier.
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24 of 32 people found the following review helpful
5.0 out of 5 stars Excellent book and more relevant than ever, February 5, 2005
By 
This review is from: Social Security: The Phony Crisis (Paperback)
Baker and Wesibrot do a yeoman's job of making the issues confront Social Security and the trust fund understandable and accessible to the average reader. There is so much misinformation (some of it deliberate) and misunderstanding out there on this topic that it's often hard to know where to begin. This book is an excellent place to start.

For other reviewers here that are ready to "throw this book across the room" or who seem to have confused a program of social insurance with "investments", I suggest they actually take the time to read the book and/or educate themselves on the issue of government bonds. First, it is hard to understand why the same government bonds backed by the full faith and credit of the United States and which are universally considered to be the safest investment in the entire free world are great investment vehicles when held by billionaires and central banks but are "worthless" when held by the Social Security trust fund. Second, Social Security is not an "investment" program, it is a program of social insurance designed to insure the elderly, the disabled and the spouses/children of the dead and disabled against poverty. It provides a solid base, a bedrock foundation, on which to build, and as such is perhaps the most successful government program in history.

There are potentially some challenges ahead for Social Security but they are easily overcome though economic growth, growth in productivity or expansion of the working population through birth or immigration. In fact, if the economic growth of the United States simply matches that of the average growth of the last 130 years, the Social Security trust fund is solvent basically forever.

I hope that Baker and Weisbrot will issue an update to this excellent book. It was written prior to the meltdown of the NASDAQ and S&P 500 and before tax cuts for the top 1 percent of the nation (paid for largely with money borrowed from the Social Security trust fund) which all by themselves dwarf any potential shortfall in the trust fund over the next seventy-five years.

Don't fall for the shell game. The trust fund represents the money that you have already paid into the system. Read the book. You'll be glad that you did.
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5 of 7 people found the following review helpful
5.0 out of 5 stars Ignore the pathetic reviews of the brain-dead conservatives., July 7, 2010
By 
This review is from: Social Security: The Phony Crisis (Paperback)
Social Security is not in a crises and never has been, and this book presents that case solidly. The poor ratings here are almost certainly from conservatives, who probably have not even read it.

Buy the book; read it; and learn the truth before the plutocrats succeed in duping enough Americans to successfully eliminate Social Security, which is the best chance working Americans have of a (mildly) secure retirement.
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3 of 4 people found the following review helpful
4.0 out of 5 stars Why doesn't Congress understand the words "Trust fund"?, October 22, 2010
By 
Yours truly, "Sheri" (A Small Town in the Sierras, USA) - See all my reviews
This review is from: Social Security: The Phony Crisis (Paperback)
Social Security was never supposed to be a part of the general Federal Budget. Unlike most other federal programs, Social Security is self-funding.

The 1935 Social Security Act created a special payroll tax to be used exclusively for funding Social Security. General revenue funds were not to be used to pay Social Security benefits, and Social Security tax receipts were not to be used for any purpose other than Social Security. Payments into the Social Security system were to be kept separate from general revenue funds and credited to the individual accounts of those who made the contributions. The Budget Enforcement Act of 1990 re-enforced this.

(my own understanding of events is that during the Viet Nam war, Congress enacted a new law that lumped Social Security funds in with the general income. Then they could legally raid Social Security "surplus" because they just made it legal to do so. But, since I don't have specific data, I'm putting this in as an aside.)

In 1983, Congress enacted a Social Security tax increase to cover the ballooning benefit payments that would result from the retirement of the "baby boomers" beginning in 2010. The increase began generating large Social Security surpluses that didn't go unnoticed by the Reagan and Bush administrations which began "dipping" into Social Security revenues and using them for non-Social Security purposes. President Clinton followed suit, and every administration since Clinton. (I don't know why everyone blames the president when Congress is in charge of spending).

In his February 27, 2001 State of the Union speech, George W. Bush promised "to pay down 2 trillion in debt over the next 10 years,... "fund the nations priorities with money left over" and protect "all $2.6 trillion of the Social Security surplus for Social Security and for Social Security alone..." Within five months, Social Security surpluses were already being used to replace lost revenues created by huge tax cuts.

Approximately $1.5 trillion of our hard-earned Social Security Trust Fund dollars, legally set aside for our retirement, have been "borrowed" and spent without our knowledge or permission. The resulting I.O.U's represent 21.3% of our National Debt and have no value unless the government at some point decides to repay the money. President Bush admitted the iou's were "worthless".

Former Congressional Budget Office Director June O'Neill indicated that the trust fund "holds no real assets." "These so-called trust fund 'assets' simply reflect the accumulated sum of funds transferred from Social Security over the years to finance other government operations."

For additional information, try "The Looting of Social Security" by economist Allen W. Smith, Ph.D.
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17 of 25 people found the following review helpful
5.0 out of 5 stars social security:the phony crisis, June 12, 2000
By A Customer
The authors took great pains to reach the lay person. After reading this book I now have a clear understanding of the workings of social security and how our funds are counted. I truly believe any one could understand this,and last but not least they made it interesting. This book is a must for anyone concerned about their retirerment
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Social Security: The Phony Crisis
Social Security: The Phony Crisis by Dean Baker (Paperback - September 15, 2001)
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