Category Archives: Social Security

Behind the Battle Over Social Security

As the midterm elections near, the future of the Social Security system has become a hot-button issue–and a confusing one. A number of Republican politicians have hit on it as yet another way to undermine Obama and the Democratic leadership, by criticizing their supposed fiscal irresponsibility. Some must also see victory at hand in the conservatives’ longstanding battle to destroy one of the most hated remnants of the New Deal. These include the GOP’s chief architect of change Paul Ryan,who wants to turn Medicare into a voucher program and privatize Social Security. He is backed up by House minority leader John Boehner, who, if the Republicans take the House, could become the next speaker. 

Some Democrats have risen to defend the best–and most solvent–anti-poverty program the nation has ever known. But for other Democrats–including those in the White House–the response is more triangulation. It was Obama who set in motion the Fiscal Commission, supposedly to study the deficit but in fact, as just about everyone in Washington knows, to pare entitlements, cutting Medicare and Social Security. Originally, this commission was thought ready to propose lifting the limit at which one could draw Social Security from 62 to 67. Now scuttlebutt  is that the entry age should be 70. Our supposedly “socialist” president has placed the country’s premier social program in the hands of Alan Simpson, a Republican crank who views old people as the new welfare queens. 

It’s not surprising, then, that a lot of older voters don’t know what to make of it. A piece in Sunday’s New York Times reported on “tales of political burnout and withdrawal among older voters” in one swing county in Colorado. Many in this consituency, which can usually be counted upon to vote in large numbers, seemed to be withdrawing altogether from the fray. Others were preparing to shoot themselves in the foot:

Bill Benton, 79, a lifelong Colorado resident who described himself as an Eisenhower Republican, supports Mr. Buck and believes that his comments suggesting that the private sector could perhaps do a better job with Social Security were “just talk.” Mr. Buck has said that despite his comments, he would not support privatizing the retirement program. “I like him, but he says some dumb things,” Mr. Benton said.

With all the rhetoric flying out of Washington, it’s likely that some older people have come to view the whole topic of Social Security as the centerpiece in a Washington charade of boasts and lies, another turn in the game of smoke and mirrors, much in the manner of the shouting match over health care. It turns the stomach, feeds the hate against Washington, and sends people fleeing to escape a nightmare they can’t understand–sometimes, it appears, right into the arms of the Tea Party.

And in fact, people who suspect a smoke-and-mirrors game are pretty much on the money. Social Security’s elevation to a central political debate is tied to another hot-button issue: The future of the Bush tax cuts. Those tax cuts, which benefit the very rich—the people who pump cash into a candidate’s campaign—are set to expire next year. “In 2010, when all the Bush tax cuts are finally phased in, a staggering 52.5 percent of the benefits will go to the richest 5 percent of taxpayers,” according to Citizens for Tax Justice, the Washington-based  public interest group that follows and analyzes tax policy.

The impact of these cuts on the national treasury–and the deficit–cannot be overestimated: “The tax legislation enacted under President George W. Bush from 2001 through 2006 will cost $2.48 trillion over the 2001-2010 period,” Citizens for Tax Justice reports. “This includes the revenue loss of $2.11 trillion that resultsdirectly from the Bush tax cuts as well as the $379 billion in additional interest.’’

Obama has declared his opposition to extending the tax cuts for the highest income brackets. But some conservative Democrats will have other ideas. And if the White House’s resolve fails, as it often does, there’s another deficit-cutting alternative at hand in Medicare and Social Security. It’s a lot easier for politicians to talk about paring down entitlements than it is to attack the rich on whose largesse they depend.

Republican Right Offers Reagan Redux

The Republican right’s Pledge to America is widely being compared with Newt Gingrich’s Contract with America. But for those of us with long enough memories, it more clearly harkens back a decade further, to the early days of the Reagan Administration. Now, as then, the Republican agenda has two major political thrusts.

First, the Republicans are advancing a Reaganesque program based around defense Keynesianism, an economic pump-prime through military spending. It signals a victory for the Pentagon generals who have been fighting Obama to further expand what certainly appears to be a futile war in Afghanistan and parts of Pakistan–one that can go on and on indefinitely. Moreover, the Republicans want to fund an expensive missile defense system. Just as with Reagan, once this kind of spending gets going, they will be congratulating themselves on new jobs making armaments. At the same time, they can talk of shrinking the deficit by reducing or eliminating domestic programs.

That’s the nub of the pledge, with one adroit addition. This document makes no mention of reducing or eliminating Social Security. This is good politics before the election, and it’s bound to undercut the Obama administration, which has created the fiscal commission to reduce deficits, and is widely assumed to have Medicare and Social Security in its sights. Reagan did his best to cut domestic programs of the New Deal sort. But in the end, he could never have entirely eliminated them because he always swore to maintain a basic safety net for the old and the poor–and such public pronouncements helped to undermine Democratic challenges.

The pledge provides a focus for Republican ambitions, but most importantly it removes any thought that the Tea Party people have or could ever have any real sway in Republican policy matters. During Reagan’s early forays into the countryside, there were plenty of what now would pass for Tea Party types, but they were largely excluded from the party’s overall direction. Gingrich and his New Right colleagues in Congress occupied the back benches of the House at the time, and they moved within the overall Republican party apparatus. There was–and is–no chance of a popular takeover from the fringes of the party. Instead, Reagan claimed the center, and then pushed that center further and further to the right, where it remains to this day.

Tea Party Gets Old People to Drink the Kool-Aid

By now, it’s common knowledge that older people make up a large portion of the so-called Tea Party Movement. My Mother Jones colleague Andy Kroll confirmed this once again in his report on the recent Faith and Freedom  Coalition confab here in Washington, where he described “the right’s geriatric game plan” for the midterm elections.

Pundits have trotted out various theories to explain the oldsters’ taste for Tea (they’re scared; they’re racists; they’re just plain dumb). Whatever the reason, I think it must involve some instinct toward masochism or martyrdom. How else to explain why these old folks would support politicians who want to dismantle the very social programs upon which their comfort–and possibly their very lives–depend? It looks to me like the aging right-wingers have been convinced to drink the Kool-Aid, and now they are sipping their way toward a mass suicide that will make Jim Jones’s endeavor seem like  a drop in the bucket.

I know. You think  these are the ravings of yet another demented geezer. But take a look at what the members of Congress aligned with the Tea Party have to say about Social  Security and Medicare, which alone are responsible for lifting millions of seniors out of abject, body-and-soul-destroying poverty. Referring to these old-age entitlements as a loathsome  form of “welfare,” Minnesota’s Michele Bachmann says that once the Tea Partiers gain power, they can get rid of Social Security in one long weekend. No need for the niceties of Alan Simpson’s entitlement-cutting Cat Food Commission; Bachmann wants to simply kill this New Deal relic once and for all. 

Bachmann made her pronouncements in Las Vegas at the  Rightonline Conference sponsored by the Americans for Prosperity Foundation, which is run by David Koch. As Sodahead reported:

There, more than 1,000 Tea Partiers — the majority of whom are over the age of 45 — sat in rapt silence as Bachmann outlined a plan to end Social Security for all those who will be under the age of 65 at the time her potential dream Congress enacts the legislation.The growth of the federal debt and deficit require a drastic cutback in federal spending, Bachmann said. “Spending comes first, so we have to cut it first,” she explained, speaking of her plan to devastate Social Security. “And in my opinion, it’ll take us about a long weekend to get that done, and then we’ll be fine.”

For those between the ages of 55 and 65 at the time Bachmann’s Kill Social Security Plan hypothetically passes into law, there would be a means-tested program for “those who truly need it — the truly disadvantaged, those who truly can’t go forward.” For everybody else, there would be unspecified “alternatives and adjustments.” Those under the age of 55 would apparently be squat out of luck, regardless of how truly disadvantaged they are. From the assembled Tea Partiers, not a discouraging word was heard, even as Bachmann outlined a plan to essentially rob them of the money they’ve been putting into the system all their lives.

According to a New York Times/CBS News poll conducted in April, 46 percent of Tea Party supporters fall into the 45-64 age group. (Untouched by the Bachmann plan would be the 29 percent of Tea Party supporters the poll cited as being over the age of 64.) The same survey revealed that among 47 percent of self-identified Tea Party supporters, either they or a member of their household was receiving Social Security retirement benefits. When asked whether the outlay for programs such as Social Security and Medicare are worth the taxpayer expense, 62 percent said they were.

As if this weren’t enough, some Republicans have suggested that if they take Congress in November, they may at some point force a government shutdown, on the model of the Clinton years. As Bob Cesca points out, one of the first thing that  happens when the government shuts down is–no more Social Security checks (and no Medicare payments, either.) So even if Bachman’s radical plan fails, the Tea Party oldsters may succeed in screwing themselves–and taking the rest of us geezers along with them.

Triangulating Social Security

While on vacation for the past two weeks, I didn’t read the papers or look at TV, so I was mercifully unaware of the latest bon mot from one of the leading politcal pricks of the summer, former Senator Alan Simpson, who co-chairs Obama’s entitlement-cutting “deficit commission.” Just in case you haven’t heard about it, here’s an account from CBS:

In a letter responding to criticisms against him from a group representing older women, former Wyoming Sen. Alan Simpson wrote that he has “spent many years in public life trying to stabilize” Social Security. However, he wrote, “Yes, I’ve made some plenty smart cracks about people on Social Security who milk it to the last degree. You know ’em too. It’s the same with any system in America. We’ve reached a point now where it’s like a milk cow with 310 million tits!”

Simpson made his reply in response to an article on the Huffington Post penned by Ashley Carson, executive director of the National Older Women’s League (OWL). Carson had said, “Mr. Simpson continues to paint the picture that everyone receiving Social Security benefits is living the high life–driving luxury cars, dining out and living in gated communities.” She pointed out the average Social Security beneficiary gets $13,900 annually, relegating many older women to poverty–or, to put it more bluntly, throwing them into the proverbial poor house to rot out the rest of their lives.

Simpson is simply spouting right-wing crap. And I can understand the Clintonesque Democratic Leadership Council types, led by Erskine Bowles, the other co-chair of Obama’s deficit commission, wanting to play games with the right-wingers as they try to get their usual triangulation model set up. But how Obama thinks he can win votes out of the deficit commission charade is way over my head.

Up to now, the general idea has been obvious: Set up a show commission that spends billions of dollars going through the motions of investigation and study–LOL–while busily cutting deals among Republicans and conservative Dems to pare down Social Security and Medicare. These clever people then plan to announce that they can solve the deficit problem by slightly trimming Social Security and rearranging Medicare, but not so much as to hurt today’s “seniors.” God forbid! The deal is, however, to start making serious cuts as time goes on, after the current crop of do-nothing pols have long ago retired with their great pensions, splendid medical care, into profitable jobs lobbying the Congress for more cuts.

Now, nobody ever said the politicians in Washington are very swift. But you’d think that just by reading the basic demographic swing in the nation, they could see that with the tide greatly changing so that older people–not younger people–have the voting power to run the country. What they are actually doing is to doom their successors to a ruinous economics, not to mention a nowhere political future. But then, I always forget, the single greatest motivating force among the members of Congress–and I guess, sad to say, the Obama crowd, is a matter of simple greed in their own endless quest to stay in power.

This time, though, they may have miscalculated, especially by appointing an a-hole like Simpson, whose colorful pronouncements expose the deficit commission scam for the stealth attack that it is. Social Security is known as the third rail of politics, and we can at least hope that it’s lost none of its juice.

The End of Retirement

American workers have little to celebrate on this Labor Day. That’s especially true for older workers, who face the end of any possibility of a secure retirement, so hard-won during the 20th century. In my recent Mother Jones piece on the subject, I wrote:

I contemplate my future at a time of deep recession with no pension and a depleted 401(k). And it occurs to me that the very notion of a comfortable, paid retirement may turn out to have been a temporary phenomenon, with a life span almost precisely the same as my own…And I have to wonder if someday the tale of a foolish generation of Americans, who imagined that a lifetime of work would be rewarded with a comfortable and secure old age, will become just another footnote in the annals of the market.

One commentary on the subject came earlier this year from AFL-CIO President Richard Trumka, speaking at the National Institute on Retirement Security. His conclusions regarding the possibility of change may be overly optimistic, but his analysis is sound. Here’s an excerpt:

Today’s retirement security crisis is just one of the many painful consequences of the failed economic policies of the past 30 years—policies of radical deregulation and corporate empowerment.  

They’ve culminated in the worst economic decade in living memory—job loss, wage loss, collapse of the housing and financial markets, enormous growth in inequality and the massive destruction of wealth.  

These policies allowed — and even encouraged — employers to walk away from what had been a system of shared responsibility.  The result?  Today, fewer than 20 percent of private-sector workers have real, defined-benefit pensions. 

As a country, our challenge now is to build a new economy on a solid foundation of good jobs, opportunity, a return to shared responsibility and a level playing field that allows both workers and business to thrive.

Keeping the promise of retirement security must be part of this great transformation in American life…part of the legacy we seek to build and the future we envision. 

Today only 13 percent of workers say they are very confident about having enough money for a comfortable retirement—that’s the lowest level in 16 years.  And this lack of confidence is justified.  The majority of America’s workers will face retirement with far less security than their parents.

That’s especially painful to me—because it was our union movement that created retirement in the United States.  Before the rise of the labor movement in the 1930s and 40s, elderly Americans were the most impoverished age group in our society, and only a privileged few received government or employer pensions.

With the enactment of Social Security and the growth of union-negotiated pensions, elderly Americans became the least impoverished age group.

After the New Deal, it was collective bargaining that set the pattern for labor markets—and not just for workers covered by union contracts.

These were the years that produced the three-tiered American retirement system:  Government provided a foundation with Social Security, employers provided defined-benefit pensions and individuals saved for their retirement. 

With this system, our parents could retire after a career of hard work, confident of a stable income they would not outlive.  They could sleep at night knowing that, should they die, their spouse would continue to have a dependable income. 

For millions of Americans—teachers and bus drivers, factory workers and flight attendants, construction workers and nurses—reliable, employer-funded pensions made their lives immeasurably better.

That was a legacy.  That was the world I grew up in back in Nemacolin, Pennsylvania.  A world where working people had real pensions they had won at the bargaining table and on the picket line…

…A world where retirement, which had been a dream realized only by bosses, had become a reality for tens of millions thanks to Social Security and collective bargaining. 

Today, all three tiers of that retirement system we built are in danger.  Employers are increasingly abandoning their pension plans.  Workers with lost jobs and stagnant incomes are unable to save.

In this bleak landscape, Social Security stands out as the one feature of what passes for our retirement system that works for all Americans.  But too many in Washington seem bent on perpetuating the Bush administration’s attacks on Social Security. 

The labor movement took on those people and beat them in the Bush era — and we will do the same in the Obama era.

When people lump together Social Security attacks with deficit reduction efforts, we have to remind the public of this basic fact: Social Security is NOT contributing to our budget deficit—in fact, the buildup of the Social Security Trust Fund is financing our budget deficit. 

And while the program faces a funding shortfall over the next 75 years, in pension plan terms, Social Security is 88 percent funded over that 75 year period of time and by any measure would be considered a healthy pension plan.  Relatively modest adjustments—WITHOUT benefit cuts—can address even this long-term issue. 

Social Security is the most important family income protection program and the most effective anti-poverty program ever enacted in the United States.  One-third of Social Security beneficiaries receive more than 90 percent of their income from Social Security.  Two out of three depend on it for more than half of their income. 

Social Security is the sole source of income for nearly one in five seniors.  The average Social Security benefit is just little more than a minimum wage income—meaning a typical retiree needs almost twice the average monthly Social Security benefit for a reasonable standard of living.

And if that’s not bad enough, growing Medicare cost-sharing means our seniors will need higher benefits just to maintain the replacement rate of the past 25 years.

Social Security benefits must remain at least as robust as they are today…quite frankly, INCREASING Social Security benefits would be a massive boost for our economy right now and for our long-term ability to provide all Americans financial security in retirement.

Social Security is the ONLY reliable and guaranteed benefit for the growing number of people without pensions.  But Social Security by itself cannot provide retirement security for most Americans.

And despite all the flashy new investment products the financial services industry markets, traditional defined-benefit pension plans remain the soundest vehicles for building and safeguarding retirement income security. 

If you are lucky enough to have a union, there is still a good chance that you have a pension plan.  Sixty-six percent of union workers have pensions, compared with only 15 percent of nonunion workers.  But unions are under increasing pressure at the bargaining table to allow employers to cut or eliminate real pensions. 

In the private sector, the funding rules for single employer pension plans in the Pension Protection Act of 2006, coupled with new accounting standards, have contributed to an environment in which even healthy companies are freezing their pension plans entirely or closing them to new hires.

Our current economic downturn has made this much worse.  In many parts of this country, public-sector workers have the right to form unions.  Not surprisingly, state and local government workers are four times more likely than private-sector workers to have defined-benefit plan coverage.  But public-sector plans are under attack through legislation and ballot initiatives.

In the private sector, over the past decade, many employers have abandoned their real pensions for 401(k) plans—plans with little or no employer money … plans with no protection for workers against market risk or outliving your money … and plans with high investment management fees.

We hear different reasons for this, but here’s the bottom-line problem:  Our current system lets employers off the hook.  They can refuse to provide any benefits at all.   If there ever was an implicit social contract, it has eroded.  My friends, that is NOT the vision I have for America. 

Unfortunately, the vision put forth by policy makers in both political parties and the White House is for tepid reforms that address only the shortcomings of the 401(k) system.  I think we were all glad that the president included retirement security as a national issue in his State of the Union address last week. But his remedies fall short.

Tinkering with 401(k)s by adding automatic enrollments as a plan feature will not bring about the change we need.  And what good is individual annuitization if you don’t have any money in your account and you are at the mercy of the insurance industry on pricing?

At best, I’m afraid, these proposals will marginally increase retirement savings for those who already can afford to contribute, and will do nothing to make employers take some responsibility in this crisis.

In this crisis economy workers can barely meet day-to-day expenses.  How much then can they save on their own for retirement?  Plainly put: There is no way that 401(k) plans can adequately substitute for the loss of a guaranteed lifetime benefit.

Look at the data: The median account balance in 401(k) type plans for 62-year-old workers is worth an annuity payout of about $400 a month.  $400 a month.  That just doesn’t cut it.  And most workers will outlive their savings.

A Time magazine cover story last fall on the failure of 401(k) plans about summed it up:  “This isn’t how retirement was supposed to be.”   After a lifetime of hard work, workers deserve to retire with dignity—with the economic security they have earned. 

It is imperative to strengthen and preserve what remains of the current private-sector pension system by working on two tracks—through collective bargaining and through legislation…

Obama’s Cat Food Commission, Alan Greenspan, and the Dancing Grannies for Medicare

President Obama’s Deficit Commission is all smoke and mirrors. Its members are making a big show of laboring over “painful” choices and considering all options in their quest to bring down the deficit. But  inside the Beltway everyone knows what’s going to happen: The commission will reduce the deficit on the backs of the old and the poor, through cuts to Social Security, Medicare, and Medicaid. Some opponents have taken to calling it the Cat Food Commission, since that’s what it’s victims will be forced to eat once the commission gets done slashing away at their modest entitlements.

In fact, the true intent of the Deficit Commission was evident before it was even formed. That intent was only driven home when Obama appointed as its co-chair Alan Simpson, who is well known for voicing, in the most colorful terms, what Paul Krugman calls the “zombie lie” that old-age entitlements will soon bankrupt the country.

So why the big show? Because neither Obama nor the Congress wants to get caught cutting Social Security and Medicare in public, certainly not before the November elections. (Medicaid will be cut as well, but politicians tend not to worry so much about poor people, since they don’t go to the polls in the numbers we geezers do.) So instead, they are foisting off this unpleasant task onto the Deficit Commission, showing what the lawyers call “due diligence,” sucking their thumbs and pretending to study how to cut the deficit. They’ve got $1 billion in walk-around money to pay for propaganda so the PR industry ought to be plenty happy. So too, should billionaire Pete Peterson, as he and his foundation lackeys push forward towards a victory in their longstanding attack on entitlements.

Quite frankly, if the Republican Right could get itself together and shove the Tea Party nuts back into their cave–as Reagan did with the crackpots hanging around him–they too could reap the benefits of the Cat Food Commission’s work. Ever since the New Deal, the Right has been kicking and screaming about Social Security. Things just got worse in the 1960s with Medicare and Medicaid. And now, thanks to our supposedly “socialist” president, they are within a few inches of cutting a nice hefty hunk out of the largest social programs this nation has ever known.

As one Capital Hill player recently wrote me: “Unfortunately, everyone in a position of power up here knows full-well the connection between Peterson, the commission and Simpson.  They either don’t care or are too afraid to say anything because they’ll appear ‘soft on deficits.’  It’s no different than their Iraq war votes…they believe they’ll appear ‘weak’ if they don’t jump on the bandwagon. The Democrats, (with the exception of Nancy Pelosi and only a handful of others–including commission member Jan Schakowsky), have no intention of taking on Peterson’s crew.  Congress may be  a lost cause on this issue, if the voters don’t get pissed off about the Commission fast.” 

Will enough voters get pissed off enough, soon enough to slow down the anti-entitlement juggernaut? It’s a long shot, at this point. There are signs of something like a small movement growing around the Cat Food Commission idea, and scattered protests (among them a demonstration dubbed the “Dancing Grannies for Medicare.”)

But it’s going to take a lot to waylay the likely course of future events:  The Cat Food Commission will undoubtedly recommend, and a lame duck Congress will pass, legislation that looks fairly innocuous: trimming Social Security a bit, maybe by upping the age by a few years, and cutting a little from Medicare–none of it affecting anyone who is over 65 right now. That will enable the politicians now in office to look like they are protecting seniors and fending off any drastic cuts, while at the same time appearing “tough” on the deficit. But the legislation, in the usual Washington mode, will gradually widen as the years go by, so that by the time this bunch of pols are retired (on their fat pensions) and out of the fray, the new rules will be eating  into entitlements in a big way.

The other side of this Faustian bargain would appear to be Congress passing some tax increases. “In setting up his National Commission on Fiscal Responsibility and Reform,” William Greider recently wrote in The Nation, “Barack Obama is again playing coy in public, but his intentions are widely understood among Washington insiders.” As Greider puts it, “The president intends to offer Social Security as a sacrificial lamb to entice conservative deficit hawks into a grand bipartisan compromise in which Democrats agree to cut Social Security benefits for future retirees while Republicans accede to significant tax increases to reduce government red ink.”

It remains to be seen how “significant” those tax increases actually turn out to be. But even former Federal Reserve Chair Alan Greenspan seems to be on board with this general plan. Greenspan’s credentials include chairing the first major entitlement-cutting commission back in the 1980s, as well as promoting the Bush-era tax cuts that helped the deficit grow to its current proportions. He still says that reductions to Medicare benefits are necessary–but in a recent interview in the New York Times, Greenspan also says that he now wants to remove all the Bush tax cuts. Seeing as it comes from the champion of “let them eat cake” economics, this pronouncement must be seen as predictor of how conservatives could end up voting. In short, the old and the poor will have to eat cat food, but the rich might kick in a few crumbs as well.

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The Annual Social Security Bash-a-thon Is About to Begin

Ida May Fuller receive the first Social Security check in 1940.

 Today is the big Day for Social Security bashers. The trustees of the nation’s retirement system will be releasing their annual financial report, and you can bet that no matter what it says, politicians from left to right will use it as the pretext for a smackdown, reluctantly and oh so sorrowfully concluding that Roosevelt’s New Deal project is about to cause the nation to go broke. The only thing to do, they will lament, is to cut Social Security as a small step in curtailing entitlements and thereby eventually balancing the budget. 

The biggest suckers in the Social Security takedown are not the politicians or policy wonks, but the journalists–and in particular, the gaggle of screaming pundits on cable TV–who lap up their spoon-fed pablum without casting anything remotely resembling a critical eye. They apparently consider the idea of reporters doing their homework as a quaint habit of bygone days. Otherwise, they would know that–as two longtime experts on Social Security write–our leading old-age social program, which is celebrating its 75th year, is actually “an essential program in admirable fiscal health.” 

In preparation for the coming attack, the Nieman Foundation at Harvard has asked Nancy Altman and Eric Kingson–both former staff of the Greenspan Commission that studied Social Security back in the 1980s, who have been tracking the program ever since–to write a primer to help the general public make sense of charge and counter charge. Altman and Kingson, who currently co-chair the Strengthen Social Security Campaign, call their report “Newsflash! Journalists prepared to once again utterly misread annual Social Security Trustees report.” I am reprinting salient points from the piece here. 

Thursday’s report will once again describe an essential program in admirable fiscal health. But every year, journalists twist the facts to fit a narrative favored by the political elite: that the program is in crisis. Rather than manufacturing a false drama that shakes people’s confidence about their future benefits, two Social Security experts write, reporters should stick to the facts. 

….. Social Security is the most fiscally responsible part of the budget, projecting income and outgo three-quarters of a century into the future — longer than private pensions or even the social security programs of most other countries. When projecting out over such a long time period, it will sometimes project deficits, providing considerable lead time for Congress to make adjustments that are needed from time to time. This careful monitoring and close examination of Social Security should provide the American people with confidence that the program will always pay benefits on time and in full, as it always has. Instead, the non-news in the report is spun every year to make the program appear headed toward bankruptcy — an impossibility, given how the program is financed. The natural result of that story angle is to shake the confidence of hardworking Americans who have contributed and earned benefits and to frighten those who currently receive benefits. 

Here are some questions reporters should ask about Social Security in order to accurately report the news. 

Q. What does the report say about the current and near-future state of Social Security? Doesn’t it reveal, just as last year’s did, that Social Security is currently in surplus? Doesn’t it say that Social Security has an accumulated surplus of over $2.6 trillion, which will grow to over $4 trillion by the 2020s, and can pay all benefits in full and on time for a quarter of a century? How much, or little, is today’s situation like that of 30 years ago, the last time Congress acted to eliminate a projected deficit?  

This year’s Trustees Report will make 100 percent clear that Social Security is in strong financial shape, notwithstanding the projection of a moderate shortfall still decades away. It will show that we are not in any way facing the type of financing crisis experienced by Social Security in the mid-1970s and early 1980s. Back then, Social Security faced large, immediate shortfalls. If Congress had not passed and if President Reagan had not signed legislation early in 1983, then some time later that year, Social Security would not have been able to pay all benefits as promised. Nothing like this is remotely possible today. In fact, the Social Security actuaries’ low-cost optimistic assumptions will project, as last year’s did, that Social Security faces no shortfall at all. These projections are simply not consistent with the claim that Social Security is in crisis. 

Q. If most of Social Security’s revenue in the future will come from future contributions of workers and their employers, and if the Trustees Report indicates that, even with no change whatsoever, three-fourths of all benefits can be paid on time for the next 75 years and beyond, why do so many young people think they will never get a penny from the program? Why aren’t politicians correcting this mistaken view?  

The undermining of confidence in Social Security’s future is central to the attack on the program, as it softens resistance to radical changes that would greatly reduce benefits, especially for middle aged and young Americans. After all, if these citizens can be convinced that Social Security is unsustainable, that it will not be there for them, then they will be more likely to embrace reforms, even if these reforms drastically reduce the benefits they are earning. 

Q. If there is no immediate problem, why has President Obama empowered a deficit commission — which lacks a single commissioner or even staff member whose primary expertise is Social Security — to propose changes to Social Security? And why has the Congressional leadership agreed to an up-or-down vote in a “lame duck” session, should the commission reach consensus? (See our earlier article for NiemanWatchdog.org, “Has Obama created a Social Security ‘death panel’?) 

Frankly, we do not know, though it seems that some political elites want to do something deeply unpopular, yet avoid political accountability. Poll after poll on the subject reveals that overwhelming percentages of Democrats, Independents, Republicans, the young, the old, Tea Partiers, union households and everyone else do not want benefits cut or the full retirement age increased. To close the projected shortfall, they want new revenue, preferably from progressive sources such as increasing or eliminating the maximum amount on which contributions are assessed (and benefits calculated). Seemingly, some among the elites think they know best, but can’t explain it and don’t want to take the heat from simply going against the will of the people. (In the past, Social Security legislation has always gone through regular congressional processes with review, amendment and debate by members of Congress, especially those serving on committees that have jurisdiction over the program.) 

Some politicians — the so-called “deficit hawks” — view the confluence of Social Security’s projected shortfall with the serious long-term fiscal imbalance in federal spending as providing an opportunity to position themselves as being “tough” on the deficit. Most concerning, the same forces that brought us unsustainable long-term federal deficits — the ones that passed tax cuts for the rich, that brought us into two unfunded wars, that deregulated the banks and mortgage systems, nearly collapsing the economy and then had the temerity to give themselves huge bonuses beyond what ordinary Americans can imagine making in a lifetime — these same forces are now trying to pin this deficit on the most cautiously financed program the nation has. 

To put things into perspective: Social Security’s entire projected shortfall is just 0.7 percent of Gross Domestic Product — about the same amount it would cost to extend the top Bush tax cuts for the top one percent of the nation’s wealthiest persons. 

Q. Is it accurate to say that Social Security is, for the first time, taking in less in payroll tax contributions than it is paying out in benefits?  

It is the first time since 1983 that it is paying out more, but 1983 marked the beginning of a period during which Social Security started building large surpluses in anticipation of the retirement of the baby boom. There is nothing new or surprising about Social Security’s benefits exceeding the so-called payroll taxes. Benefits exceeded payroll tax contributions in 1958, 1959, 1961, 1962, 1965, 1975, 1976, 1977, 1978, 1979, 1980, 1981, 1982 and 1983. The sky did not fall. Indeed, the trust funds acted as intended, providing a margin of safety so that benefits could be fully paid, even in very difficult economic times. (see Table 4.A3–Combined OASI and DI, 1957-2008 in the Social Security Administration’s Annual Statistical Supplement, 2009). 

Most important, though not well understood, payroll taxes are only one of Social Security’s three revenue sources. Payroll taxes are the mandatory contributions, deducted from the wages of workers, and matched by employers. But Social Security also collects interest on the surpluses it has invested in certificates of obligation and bonds issued by the U.S. Treasury. And the program also collects income taxes on the Social Security benefits of those with higher incomes. These three sources of revenue, taken together, exceed the cost of all benefits and associated administrative costs in 2010 by a projected $138.4 billion, according to the 2009 Trustees Report

Q. And finally, why is all the attention focused on sustainability, instead of celebrating on this 75th Anniversary how this program has, through good and bad times, protected working Americans and their families and given expression to widely held values — rewarding hard work, caring for parents, neighbors and ourselves? 

Today Social Security is America’s most important source of retirement income protection. It is also the country’s most important disability protection and life insurance protection, especially for all our children. Given the unpredictability of disability and premature death, and the insecurity of employer-sponsored retirement arrangements, stocks, home equity, and other savings, Social Security will be an even more important source of income for tomorrow’s workers. Adequate financing is obviously very important, but it is not an end in itself.