May 19, 1998
Sunday Journal, May 19, 1998
Well it’s that time of year again, the lilacs are blooming, the air is thick with the smell of spring, and the Trustees of the Social Security Trust Fund have released their annual report. This is the time when we try to get some of those who write, blab, or pontificate about such natural disasters as “demographic tidal waves” to actually take a look at this little publication, or at least a few of its tables.
For this year’s incentive, I offer the following reward: a brief look at the report will help you avoid public embarrassment. For example, consider this statement by a prominent newspaper just last week: “Social Security faces a crisis early next century when the 76 million in the baby boom generation start retiring and putting a strain on the system.” (I don’t want to mention any names so let’s just say the paper’s initials are NYT and their masthead says something about “All the News That’s Fit to Print.”)
Now that’s exactly how rumors get started. The reality is that the first baby boomers will begin retiring in 2008. At that time the Social Security system will running an even bigger annual surplus– revenues minus payouts– than the $100 billion for this year. It will have an accumulated surplus of more than $1.5 trillion, which will keep growing until 2021. If that’s a crisis, I’d like to know how I can create a similar crisis in my own personal finances.
Not until 2032, after the baby boomers have been retired, does the program face a projected shortfall. And even then, the system would be far from “bankrupt.” Although it would fall short of its promises, it would still take in enough money to pay retirees at a higher level than today’s benefits– in real (inflation-adjusted) terms– indefinitely.
In short, there will be no crisis when the baby boomers retire. And any shortfall in the decades following their retirement would require only minor adjustments.
Well, everyone makes mistakes. Lucky for the publisher of this one, the Social Security Trustees can’t sue for libel. Rest assured that any paper printing such false and defamatory remarks about a major corporation would soon find itself in court, facing legal bills on the order of those suffered by Kenneth Starr’s most reluctant witnesses.
It’s a shame we can’t get more people to look at the numbers. If most people had any idea of the actual state of Social Security’s finances, they would see the whole debate for what it really is: a farce.
Of course, it would help if we had some political leaders who were willing to stand up to the Wall Street lobby– who wants to privatize the system in order to skim off a bit of this enormous amount of retirement savings– and tell the truth about the situation. But they get their stomach from the latest polls and focus groups, which are of course based on people who have been strategically misinformed. Before you can say “baah, ram, ewe,” the pundits and policy wonks have gathered themselves into one big herd of sheep, all too intimidated to challenge the now “accepted wisdom” that Social Security is in trouble and needs to be “fixed.”
President Clinton has positioned himself in the center of the flock. Commenting on the Trustees’ report this week, he was clearly banking on the probability that nobody with access to an editorial page would read it: “Nearly everybody knows that something substantial, really substantial, has to be done to reform the Social Security system to accommodate the baby boom generation and then, subsequent, the generations after that.”
Hah! They think they have the people fooled, but wait till they actually start whittling away at the nation’s most successful and popular government program, which keeps half of our senior citizens out of poverty. Then they will discover how quickly the “public consensus” can change, as the facts they have worked so hard to bury re-emerge into the daylight.