Is Greg Mankiw lying?

What brought me out of semi-retirement is this brief story in today's WSJ:

"PHILADELPHIA -- President Bush's top economic adviser, responding to criticism of the administration's plans to shore up Social Security, said the White House isn't seeking to slash retiree benefits, but aims simply to stop the system from showering ever-larger benefits on each new generation of retirees.

"N. Gregory Mankiw said that under current law, Social Security benefits for the average U.S. citizen are set to increase "by over 40%" in inflation-adjusted terms over the next four decades. To pay for such increases, he said, the government would have to raise payroll taxes to levels that could hobble the U.S. economy and make it "more like those of Europe."

(Quote from Mankiw)

"Public opposition to Mr. Bush's proposals for overhauling the Social Security system has grown as details have become known. The seniors group AARP launched a newspaper advertising campaign denouncing a proposal to permit workers to direct some of their payroll taxes into private savings accounts. Critics have also charged that Mr. Bush's proposal to index Social Security benefits to inflation instead of wage increases would reduce benefits by a third over the next few decades.

"Mr. Mankiw, who is chairman of Mr. Bush's Council of Economic Advisers, said the government didn't begin to index benefits to wage growth until the late 1970s. Even then, he said, prominent economists were arguing that the system was too generous because wages tend to grow faster than prices. Unless the current system is revamped, he said, the U.S. government by 2018 will be paying out more in benefits than it receives in revenue. By 2042, the system will be "insolvent." If Congress were to wait until then to raise taxes to pay for benefits, payroll taxes would need to increase by about 50%, he said. Tax increases of that magnitude would have "adverse effects on the overall economy.""

First, if you cut the rate of growth of benefits, then you're slashing benefits. Hopefully, the media will notice this. I doubt they will, of course.

Second, saying the system will be "insolvent" in 2042 is overstating it a bit. That's one estimate of when the system will be forced to pay less in benefits. Another estimate, one not made by Bush appointees, predicts that day will come in 2052. In either year, the system will be able to pay 75-80% of full benefits for decades to come. Does that sound like an "insolvent" system?

Finally, I don't know what to make of his claim that payroll taxes would need to increase by about 50%. I will do my damnedest to find out, because that sounds like a lot of bullshit to me, or at least like the usual Mankiw-speak, which is it's bunch of shit molded around a sliver of truth to make a sort of bullshit panini.