Today’s crop of Social Security stories features a couple of what are quickly becoming the Seven (or Eight, or Nine) Deadly Sins of Social Security Reporting.
In an Associated Press story today headlined “Bush Eyes Plan Using Bulk of Payroll Taxes,” the lead paragraph tells us that “President Bush is expected to unveil his plan for a Social Security overhaul in late February, with administration officials eyeing investment accounts that would hold two-thirds of workers’ annual payroll taxes.” (Our emphasis.)
Later in the piece, we find out that an anonymous official says “the administration is leaning toward letting workers divert 4 percentage points of their 6.2 percent in payroll taxes — almost two-thirds — into investment accounts …” Trouble is, the Social Security system actually collects 12.4 percent of workers’ income — 6.2 percent of workers’ paychecks, and a matching amount from employers.
Using the handy God-given calculators between our ears, we discovered that 4 is about one-third of 12.4, not two-thirds, and certainly not the “bulk” of the system as AP’s headline suggests.
(Meantime, Atrios points out that an earlier version of the piece that hit the wire last night made an even more egregious error: confusing “percentage” with “percentage point.” The earlier piece notes that the possible proposal “would allow younger workers to invest up to 4 percent of their payroll taxes in private accounts” — but what’s under discussion is 4 percentage points, or about 30 percent of the program’s revenues. After all, 4 percent of one’s payroll taxes would amount to less than one half of one percent of one’s actual pay. For a lot of us, that would be a set-aside of, oh, say, $3 a week with which to play the stock market.)
But wait — there’s more!
As Atrios noted today, that same article misrepresents the benefit levels predicted for the shift to the private accounts plan. The AP tells us:
For example, a person retiring in 2012 with an annual income of $35,277 is promised $1,194 in monthly benefits, in 2001 dollars. If the formula is changed, the monthly benefit would be reduced by 0.9 percent to about $1,183 per month.
The younger the worker, the more dramatic the cuts. For a person retiring in 2075, the monthly promised benefit of $2,032 would be cut by 45.9 percent to $1,099 a month.
In each case, income from the worker’s private account, funded with a portion of their Social Security tax, would be expected to at least make up the difference.
But that just isn’t true. For one, the administration has said it doesn’t intend to implement private accounts for those at or near the retirement age — thus someone retiring in 2012 wouldn’t even have a private account to make up the difference. Second, the expectation is that even with private accounts, the total amount retirees are likely to receive would still be slightly below what is promised under current law (see this table or these graphs, both based on data from the Congressional Budget Office).
A small three-sentence sidebar from the AP sheds some light on how the administration plans to manipulate the media into feeding its rhetoric to the public. The second sentence of the sidebar reads, “OTHER IDEAS WELCOME: White House officials say President Bush has not approved any specific proposal and will consider others for strengthening the program.” “Strengthening the program” is lifted directly from a (highly disputable) talking point that Scott McClellan provided for the AP’s longer article on the subject.
On the plus side, if the White House really is waiting until February to formally roll out its plan, as the AP reports, that means the wire service still has another eight weeks to make penance — and to learn math.