>From my friend Dean Baker, at the Preamble Center
([EMAIL PROTECTED]), who would probably prefer that NATO
invade Switzerland, or possibly Virginia, rather than Yugoslavia:
Return to [EMAIL PROTECTED] Not to me.
mbs
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The following is a petition requesting that the Social Security
Administration produce projections on stock returns before any
Social Security money is placed in the stock market. Most of the
debate around placing Social Security funds in the stock market
has used the assumption that the real returns in the stock market
will be between 6.75-7.0 percent based on past averages.
This assumption ignores the fact that current price to earnings
ratios for major stock indexes are over to 30 to 1, compared to
an average of less than 15 to 1 over the prior fifty years. It
also ignores the fact that the Social Security Trustees project
that domestic profits will grow less than 1.5 percent annually
over the next seventy five years, compared to an average growth
rate of more than 3.0 percent over the previous seventy five
years. No one has yet demonstrated how 6.75-7.0 percent real
returns can be obtained with current stock valuations and the
projected growth rate of profits.
Please pass this petition along to other economists. To have your
name added, you can mail a copy to:
Preamble Center
1737 21st, NW
Washington, DC 20009
Fax # 202-265-3647.
e-mail [EMAIL PROTECTED]
Thanks,
Dean Baker
Senior Research Fellow, Preamble Center
Economists' Petition for Complete Social Security Projections
If the stock market is part of a Social Security reform plan,
then it is necessary to have explicit projections about future
stock returns. The Social Security trustees already make explicit
assumptions about annual rates of economic growth, population
growth, trends in life expectancy, and other factors that are
relevant to the health of the program in order to provide a basis
for its seventy five projections of the solvency of the Social
Security program (see pp 58-63 of the 1999 Social Security
Trustees Report).
Before adopting any proposal that puts Social Security money in
the stock market (either collectively through trust fund
investment or individually with private accounts), the
undersigned economists urge Congress to require that the Social
Security Administration produce a set of assumptions for the two
components of stock returns (capital gains and dividend payouts)
that have the same level of detail as the other projections that
appear in the Trustees Report.
Name Affiliation
