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Man Picked to Make Changes to Social Security Doesn’t Understand Basic Concepts of Social Security

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Man Picked to Make Changes to Social Security Doesn’t Understand Basic Concepts of Social Security

I mentioned yesterday, and Michael Whitney reinforced, that Alan Simpson denigrated some data on Social Security because he decided the figures came from “the Catfood Commission people.” And that’s a feather in someone’s cap, I guess.

But it’s worth jumping into what that actual data was that Ryan Grim confronted him with. Because it reveals Simpson, as if this needed revealing, to be utterly clueless about the Social Security system and basic demographic realities. So here’s what prompted Ryan’s question:

Simpson argued that Social Security was originally intended more as a welfare program.

“It was never intended as a retirement program. It was set up in ‘37 and ‘38 to take care of people who were in distress — ditch diggers, wage earners — it was to give them 43 percent of the replacement rate of their wages. The [life expectancy] was 63. That’s why they set retirement age at 65” for Social Security, he said.

This is something Simpson has said for some time, and it is based on total ignorance. So Ryan called him on it.

HuffPost suggested to Simpson during a telephone interview that his claim about life expectancy was misleading because his data include people who died in childhood of diseases that are now largely preventable. Incorporating such early deaths skews the average life expectancy number downward, making it appear as if people live dramatically longer today than they did half a century ago. According to the Social Security Administration’s actuaries, women who lived to 65 in 1940 had a life expectancy of 79.7 years and men were expected to live 77.7 years.

“If that is the case — and I don’t think it is — then that means they put in peanuts,” said Simpson [...]

Told that the data came directly from the Social Security Administration, Simpson continued to insist it was inaccurate, while misstating the nature of a statistical average: “If you’re telling me that a guy who got to be 65 in 1940 — that all of them lived to be 77 — that is just not correct. Just because a guy gets to be 65, he’s gonna live to be 77? Hell, that’s my genre. That’s not true,” said Simpson, who will turn 80 in September.

So faced with information that conflicts with his worldview, here’s what Simpson does:

1) first he says he doesn’t believe it.
2) then he applies the same “lucky duckies” treatment to the “greatest generation,” folks that lived through the Depression, to denigrate their receipt of Social Security benefits
3) then he just throws up some nonsense that shows he doesn’t understand statistical averages, which don’t mean that every single individual who reached 65 made it to 77 in the 1940s.

All you have to do is look up the very first recipient of monthly Social Security benefits, a woman named Ida May Fuller, who paid a grand total of $24.75 into the system, lived to be 100 years old, and received $22,888.92 from Social Security. And this should not be denigrated but celebrated as the system of social insurance working. The age of 65 was chosen as the retirement age because of general observations about retirement ages for civil service professionals at the time, not to cheat people out of their benefits, as Simpson would have you believe.

In actuality, the life expectancy at age 65 has increased to the extent that Social Security is paying out more benefits for a grand total of 3 years, after 70 years in operation. This is why the system endures, with minor changes (the retirement age has already increased to 67), because the people who designed it built in the flexibility and buildup of benefits in the trust fund to account for any population pattern shifts. About the only thing they didn’t expect was the massive, rampant inequality that made the payroll tax cap lead to a far lower collection in revenues than expected. That can be altered and the program saved with relative ease.

Simpson concluded his evasions by claiming that only Ryan Grim dared to challenge his figures, so he must be doing something right.

Simpson said that questioning his data wasn’t helping to solve the underlying problem.

“This is the first time, the first time — and Erskine [Bowles, the deficit commission co-chair,] and I have been talking for a year and many months — that anyone’s going to sit around and play with statistics like this,” he told HuffPost. “Anything I tell you, you repudiate. You’re the first guy in a year and a half who’s stood out here with a sharp pencil playing a game that doesn’t have a damn thing to do with: ‘What the hell are you going to do with the system?’”

This is a commentary on the poor performance of the media more than anything. But in addition to that, it’s not true: Alex Lawson, one of those Catfood Commission people, challenged him on practically all of this a year ago. We have it on tape.

The fact that Simpson doesn’t know anything about Social Security should come as deeply embarrassing to the elites who elevated him as a point person on deficit reduction and Social Security changes, all the way up to the President of the United States, who appointed him to the commission. But embarrassment over horrible decisions has no place in elite Washington.

David Dayen

David Dayen is a Los Angeles-based writer and regular contributor to The American Prospect.

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