August 11, 2010
Confused readers may wonder based on its lead editorial complaining that supporters of Social Security: “pursue a maddening strategy of minimizing the existence of any problem and accusing those who seek solutions of trying to destroy Social Security (emphasis added).”
The piece begins by telling readers that: “THIS YEAR, for the first time since 1983, Social Security will pay out more in benefits than it receives from payroll taxes — $41 billion. This development is not an emergency, but it is a warning sign (emphasis in original).” It certainly is a warning sign. The falloff in Social Security tax revenue is a warning that the economy is seriously depressed due to the collapse of the housing bubble. Double digit unemployment leads to all sorts of problems, including the strains that it places on pension funds like Social Security.
In a sane newspaper the next sentence would be pointing out the urgent need to get back to full employment. Instead the Post tells readers:
“Too soon, this year’s anomaly will become the norm. By 2037, all the Social Security reserves will have been drained and the income flowing into the program will only be enough to pay 75 percent of scheduled benefits. If that sounds tolerable, consider that two-thirds of seniors rely on Social Security as their main source of income. The average annual benefit is $14,000. Those who care most about avoiding such painful cuts ought to be working on ways to bolster the program’s finances — and soon, when the necessary changes will be less drastic than if action is postponed.”
Let’s see, it would be intolerable to have Social Security pay 75 percent of scheduled benefits in 2037, but one of the Post preferred cuts is raising the retirement age to 70,a 15 percent cut in benefits when fully phased in. So the Post thinks it would be just fine to have beneficiaries get 85 percent of scheduled benefits in 2037.
Of course doing nothing today, or for the next decade, or even the next two decades, does not imply that beneficiaries will see their benefits cuts by 25 percent in 2037. The Post may not be familiar with the way Congress works, but it tends to wait until issues require action. They would know this if they had heard about the Greenspan Commission, which was established in 1982 to deal with Social Security’s last crisis. It produced a set of fixes which is now expected to keep the program solvent for 54 years, and no one missed a check.
While it would not be desirable to wait until the system was literally facing a shortfall, as was the case when the Greenspan Commission, there is little obvious harm to waiting now in terms of the program’s finances. A Greenspan Commission size fix put in place in 2030 would leave the program fully solvent for most of the rest of the century.
There is also a very good reason for delay. The opponents of Social Security have been spending huge amounts of money deliberately promoting misinformation. Peter Peterson, the richest and most prominent opponent, has repeatedly asserted that the Social Security trust fund does not exist. This flat earth view of the program has been given respectful treatment at the highest levels of government. When Peterson put on a daylong program on the deficit in the spring both of the co-chairs of President Obama’s deficit commission took part in the program as did former President Clinton.
This massive effort to undermine confidence in the program has been largely successful. Polls show that substantial majorities of younger workers do not expect to receive their Social Security benefits.
That is not a good environment in which to debate substantial changes to the country’s most important social program. Since there are several decades until the program faces any real problems, it is entirely reasonable for those who support the program to focus on educating the public about the program’s financial health and to seek to delay any major changes until the Peterson-type misinformation campaigns have been defeated.
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