We don’t usually share this is the kind of “inside baseball” Washington story here but today’s a little different…
For months, conservative think-tankers who undermine the value of Social Security, deny the existence of a national retirement crisis and the need to boost benefits have been banging their drum for benefit cuts especially hard. Why? Because a scarcely reported CBO report on Social Security replacement rates (now you see why we don’t usually share these kind of stories) claimed Americans received more in benefits than previously believed or reported by Social Security actuaries.
For those who make a living advocating for benefits cuts, like the American Enterprise Institute’s Andrew Biggs, the CBO report was a golden goose. His columns in the Washington Post, Wall Street Journal, Forbes and more tweets than we can count proclaimed the retirement crisis is phony and not only are Americans receiving enough Social Security benefits, some receive more than they need.
Now, anyone who actually works with beneficiaries knows his claim doesn’t reflect the real-world. Today apparently, the CBO agrees. They’ve issued a statement that their December numbers were wrong…significantly so.
“After questions were raised by outside analysts, we identified some errors in one part of our report, CBO’s 2015 Long-Term Projections for Social Security: Additional Information, which was released on December 16, 2015.
The errors occurred in CBO’s calculations of replacement rates—the ratio of Social Security recipients’ benefits to their past earnings. The estimates reported in December inadvertently included years with earnings below those intended amounts.
The corrected version shows substantially lower mean initial replacement rates for retired and disabled workers. For example, the corrected rate for retired workers born in the 1940s is 43 percent; the value CBO reported in December was 60 percent.”
Los Angeles Times columnist, Michael Hiltzik, has been covering this story including some conversations with
“Via Twitter, he has now retracted the Forbes piece. He says retractions of the others are coming. [Update: Biggs says by emailthat he has sent a retraction to the Wall Street Journal. His Washington Post piece, however, didn’t cite the original CBO figures directly.]
Biggs told me by email that the CBO’s recalculation “doesn’t radically alter the way I view the adequacy of Social Security benefits or retirement saving.” That’s because he had argued for a different formula that he says still shows replacement rates close to the CBO’s original figures.”
In other words, the facts won’t alter conservatives’ quest to cut benefits and if the formula being used doesn’t get the results they want, the CBO should just change the formula to fit the anti-Social Security crowd’s political frame.