January 15, 1999
Mark Weisbrot
Knight-Ridder/Tribune Media Services, January 15, 1999
A news article in the New York Times on January 14 referred to “Social Security’s “looming financial shortfall.” But at the end of the article this shortfall was described as “a financial gap that will leave Social Security unable to pay all beneficiaries fully, starting in 2032.”
I haven’t looked for it yet, but I would be pretty surprised to find a reference to America’s “looming Y2K problem” in 1967. Of course, back then computers were still of the big mainframe type and programmed with punch cards. And they were not nearly as big a part of our economy as they are today.
But even if they were– or could be projected to reach their prominence of today– it would have been hard to sell Y2K as a “looming problem” in 1967.
Yet hardly anyone bats an eye when such hyperbole is used to describe a problem with Social Security that is just as far away as Y2K was in 1967– and probably not much easier to forecast, with any accuracy, in terms of its actual size.
This illustrates how important the “spin” factor is when we are talking about Social Security. In fact, although very few people are aware of it, the strongest advocates and the harshest critics of “reforming” Social Security are actually using the same numbers.
How can this be? Well, first of all, there is a certain amount of dishonesty here on the part of the “reformers.” To use a sports analogy, they are saying “The Orioles had a really bad game. They only scored two runs.” Without mentioning that the other team didn’t score any.
So, for example, the reformers often remind us that 76 million baby boomers are going to retire, beginning in 2008. And that there will be only two workers paying Social Security taxes for every beneficiary in 2030, as compared to 3.3 today. Or that the population of elderly will double over the next 35 years.
All of these are perfectly reasonable projections, but also perfectly misleading. They are leaving out the other team’s score: namely, the income and assets of the Social Security system. What matters for Social Security’s finances is how much income the program takes in, versus how much it has to pay out. Since the economy grows over time, and productivity (output per employee) also grows, the demographic statistics presented by the “reformers” do not add up to any significant problem for Social Security.
In fact, even at the very slow rates of growth projected by Social Security’s trustees– less than half the rate that the economy has grown in the past– Social Security is sound for the next 33 years. And it would not take much to close the projected shortfall after 2032. As a percentage of our national income, it is less than the amount by which we increased military spending between 1978 and 1986– a period in which we were not at war.
So there is no disagreement over the numbers. Everyone is using the same figures, which are known as the “intermediate cost” projections of the Social Security Trustees.
This is important, because Social Security is now facing the threat of serious cuts as well as partial privatization– measures that no one would be considering right now if people knew that the system was basically sound.
Unfortunately, President Clinton continues to pretend that Social Security is in trouble. “In this time,” he said last month, “America faces no more important challenge than the need to save Social Security for the 21st century.” He should have added, to save it from him.
The President himself has become the biggest threat to one of America’s greatest social achievements, a system that keeps half the nation’s elderly from falling below the poverty line. The Republicans have made it crystal clear that they will not dare take this plunge unless President Clinton takes the lead. But they are more than happy to lure him to the edge of the cliff: the House Ways and Means Committee has reserved the first bill of the new Congress, HR 1, for Social Security “reform.”
All the President has to do to save Social Security is to stop talking about it. Anyone who wants to help give him the fortitude to do this is encouraged to send him a polite note: “Please leave Social Security alone.”
As one Congressman said recently, it’s time to put the lightning back in the “third rail” of American politics.
