June 18, 2001
Mark Weisbrot
Knight-Ridder/Tribune Media Services, June 18, 2001
Can the Bush Administration actually get away with privatizing and cutting the nation’s most successful government program? Social Security provides support to 45 million people — nearly one out of six Americans. It keeps half of the nation’s elderly above the poverty line. For these reasons it was long considered politically untouchable. Yet we are currently in the midst of a prolonged campaign to partially privatize the system and reduce its benefits.
The outcome will depend quite a bit on how much the “reformers” — which include powerful Wall Street financial interests — can get away with lying about Social Security.
“The threat to the stability of Social Security has been apparent for decades . . . ” said President Bush last month. “We can postpone action no longer. Social Security is a challenge now; if we fail to act, it will become a crisis.”
It so happens that Social Security is financially in better shape than it has been for most of its 65-year history, including the 1940s, 50s, 60s, and 70s. But you would never know that from reading the newspapers.
The only “threat to the stability of Social Security” comes from the “President’s Commission to Strengthen Social Security.” Who are they kidding with that name? They fully intend to slice off a chunk of Social Security’s revenue for private individual accounts, and then cut benefits to make up for the shortfall. These guys could make Orwell blush.
According to the numbers that President Bush and everyone else in the debate is relying upon, Social Security will be able to pay all promised benefits for the next 37 years, without any changes whatsoever. And there is no “crisis” involved in extending the program’s benefits for the whole 75-year planning period: the shortfall is less than three-fourths of one percent of our national income.
If it were only President Bush saying these things about Social Security, they could be dismissed as merely an effort to promote privatization. But many journalists share his confusion on the subject.
The Washington Post reported in a news article last week that Social Security “is predicted to start becoming financially unstable in the middle of the next decade.” Financially unstable? According the latest Social Security Trustees’ report, in 2015 the program will have income of $868.5 billion, and expenses of $678.4 billion, giving it an annual surplus of $190.1 billion. The accumulated Trust Fund will have $3.1 trillion dollars. (These figures are in 2001, inflation-adjusted dollars).
Again, none of the members of the President’s Commission would dispute these numbers. Instead, they try to fool the public and the press with the equivalent of one half of a baseball score. As in “the Orioles had a bad game: they only scored two runs.” Without telling you that the other team didn’t score any.
Take Richard Parsons, Chief Operating Officer of AOL Time-Warner and co-chair of the President’s Commission. “When you have two workers for every retired person, it can’t work; do the math,” he says, referring to the Trustees’ projections for 30 years from now. Well, the actuaries at Social Security have done the math, and it works just fine. The system may eventually need a bit more revenue, because people will be living longer. But it will be a very small amount relative to the nation’s future income.
There is every reason to believe that people who are living longer, and earning 40 or 50 percent more (adjusted for inflation) than we do today would be willing to spend an additional one or two percent of their income, in order to support a longer retirement. They have always been willing to do this in the past. But even if they weren’t, there is hardly any reason to be worrying about it now.
And very few people would be worried about Social Security if they had any idea what the numbers looked like. But most people don’t: in fact, as a result of a highly successful disinformation campaign, they do not even believe they will see their promised benefits. Ironically, if the President’s Commission were to have its way, this could come true.
In about six and a half years the first baby boomers will begin to retire, and there will be no noticeable impact on Social Security or on the federal budget. Perhaps then it will finally be obvious that this whole story about Social Security’s financial troubles was nothing more than an urban legend.
