April 19, 2011
The Honorable Dick Durbin
459a Russell Senate Office Building
Washington, DC 20510
Dear Senator Durbin,
In a recent ABC News interview, you criticized a measure proposed by Senator Bernie Sanders that calls for excluding Social Security from any deficit deal. You were quoted as saying:
“In 2037, as we know it, Social Security falls off a cliff… There’s a 22 percent reduction in payments which is really not something we can tolerate.”
As you know, the country has 26 years between now and 2037, so not acting in 2011 does not imply that the Congress will not do anything over the next quarter century to address the projected shortfall.
Furthermore, you should realize that the shortfall in 2037 does not necessitate any reduction in benefits. Even if Congress sat by and never did anything to fix the projected shortfall in the next 26 years, it would still have the option of raising additional revenue in 2037 if this shortfall materialized, rather than cutting benefits.
According to the Social Security trustees, the projected shortfall in revenue in 2037 would be less than 1.3 percent of GDP (SS trustees report TABLE V1.F4). By comparison, the increase in annual defense spending over the course of the last decade was more than 1.6 percentage points of GDP and in fact, there were several single years in the 40s and 50s when we increased defense spending by larger amounts.
While 1.3 percent of GDP is hardly a trivial amount, it is certainly a burden that the economy could bear if there were political will. In a context where the share of Social Security beneficiaries in the voting age population will be more than 50 percent larger than it is today (SS trustees report TABLE V.A2) it is certainly reasonable to believe that Congress would take steps to ensure that benefits are not cut by 22 percent.
In short, the prospect of a 22 percent benefit cut occurring in 2037 is highly unrealistic and is certainly not ensured by the decision to not include Social Security in any deficit package worked out by the current Congress. I hope that you will be more careful in describing this issue in the future. If I can be of any help in this matter, I would be happy to meet with you.
