February 9, 1998

Senator Judd Gregg
U.S. Senate
Washington, DC 20510

Dear Senator Gregg:

We appreciate that you took the time to respond to our earlier letter, but we are frankly amazed at the nature of your response. We initiated this exchange by requesting projections on the components of stock returns (dividends and capital gains) for Social Security's seventy-five year planning horizon, because you are supporting a Social Security reform plan which will make workers' benefits dependent on stock returns. Now you indicate to us that:

"If your paper [on eliminating the projected Social Security funding shortfall] succeeds in detailing the size and form of the tax increases required to pay off the Trust Fund during the 'drawdown' period, and shows that retirees wind up with more income under the traditional system than our plan when all relevant factors are taken into account, I would be pleased to circulate it among my colleagues, and to forward an accounting of stock return rates in short order [emphasis added]."

In other words, you will only make such projections available to the general public – projections crucial to your own proposal to change Social Security – on certain conditions.

While we are happy to engage you and your colleagues in the larger debate on Social Security and budgetary policy in general, it is hard to believe that you are making our participation in this debate a condition of giving out information about the assumptions behind your proposal. As you know, the Social Security trustees produce very detailed accounts giving year by projections on wage growth, unemployment rates, life expectancy and other relevant economic and demographic variables. The proponents of plans that rely on stock market returns have made no similarly detailed set of projections.

The point here is very simple: if a Social Security plan relies on stock returns to pay benefits, then the public is entitled to the same sort of detailed projections of stock returns as it can get from the Social Security trustees for all the other relevant economic and demographic variables. We trust that your colleagues in the House and Senate will agree with this simple proposition.

Sincerely,

Dean Baker
Co-Director, Center for Economic and Policy Research
(formerly Senior Research Fellow, Preamble Center)

Mark Weisbrot
Co-Director, Center for Economic and Policy Research
(formerly Research Director, Preamble Center)