Press Release Health and Social Programs Inequality

A Misinformed Public: The Real Problem

April 12, 2005

Contact: Karen Conner, (202) 293-5380 x117Mail_Outline

Statement by Dean Baker, Mark Weisbrot, and David Rosnick, April 12, 2005

A Misinformed Public: The Real Problem

Statement by Dean Baker, Mark Weisbrot, and David Rosnick

For Immediate Release: Tuesday, April 12, 2005

Contact: Patrick McElwee, 202-293-5380 x110

The following is the text of a statement from Dean Baker, Mark Weisbrot, and David Rosnick of the Center for Economic and Policy Research:

"The Washington Post has criticized us for arguing that there is little point in addressing the projected Social Security shortfall, when rising health care costs pose a much greater threat to the living standards of future generations ("Comparatively Major," Washington Post Editorial Board, 4-10-05; B06). The Post does not deny that rising health care costs pose a much greater problem, rather it contends that this fact is irrelevant and should not stand in the way of addressing the problem posed by the projected Social Security shortfall.

"The Post is of course welcome to its opinion on political priorities, but we feel the most important issue is that the public has been badly misled on both the size of the projected Social Security shortfall and the inefficiency of the U.S. health care system. This is in large part the result of powerful interests: some who have grossly exaggerated the size of the projected Social Security shortfall, and others who have sought to sideline an honest discussion of our health care crisis. We trust a well-informed public to be able to properly prioritize issues for themselves; our role is to ensure that whatever debate takes place be as fully informed as possible.

"We look at the exact same projections as the Post's editors. The Social Security trustees project that the program will face a shortfall in 36 years, after which date it will only be able to pay about 74 percent of scheduled benefits. The Congressional Budget Office projects that the program will first face a shortfall in 47 years, after which point it will be able to pay about 80 percent of scheduled benefits. In both scenarios, future retirees would still receive a higher real benefit than what current retirees enjoy, even if nothing is ever done to fix the program's projected shortfall. Alternatively, if taxes were raised to pay full scheduled benefits, workers would still see wage increases (net of Social Security taxes) that would dwarf any such tax increases.

"It is also worth noting that Social Security's finances looked much worse in 1965 (two major tax increases were needed in the ensuing two decades) than they do today. So if the current shortfall is viewed as a serious problem, it is at least not a new problem. In 1965, Congress devoted its attention to creating Medicare, Medicaid, and Head Start, rather than addressing the Social Security shortfall. This was not necessarily a case of mistaken priorities, in our view.

"While these are the basic facts that we can all agree on, the Social Security debate is taking place in a different world altogether. A poll last month by Quinnipiac University found that by 49 to 42 percent, most current workers do not think that Social Security will be able to pay them a benefit when they retire – a situation that is basically impossible, barring an economic collapse.

"Our work has been directed towards giving people an accurate assessment of the size of the Social Security problem. One method that we use constantly is to simply inform the public of the authoritative projections in every forum that is open to us. Another method is to compare the size of the projected Social Security shortfall to the size of other problems facing the country. In addition to showing that the impact on future living standards of rising health care costs is vastly larger than the potential impact of higher Social Security taxes, we have also shown that for most workers, rising wage inequality poses a much greater threat to living standards, and the cost of maintaining current U.S. defense policy poses an even larger threat to future living standards.1

"We are not anxious for any of these problems to be addressed in an environment in which the public is ignorant of the basic facts. We also don't believe that such ignorance is an unavoidable condition.

"If the Washington Post, and other major media outlets, made a point of presenting these facts to the public, and calling attention to politicians who misrepresent the facts, the public would be much better informed on these issues. To be specific, when a major political figure says something to the effect that our children or grandchildren will not receive their Social Security benefits, that the trust fund does not exist, or that they will face a crushing tax burden due to Social Security tax increases, it would be appropriate to highlight such comments as gaffes. These political figures, or their representatives, should be pressured to say whether they are simply ignorant of the facts or whether they deliberately intended to mislead the public.

"Similarly, the Washington Post, and other major news sources, could devote some amount of resources to major national problems that the political leadership might prefer to ignore. Even careful readers of the Post are likely ignorant of the sharp increase in wage inequality over the last quarter century, and how much more that has cost most Americans than any possible tax increase that might be needed to maintain the current Social Security program. Most probably have no idea that we spend nearly twice as much per person as other developed countries on health care, and have worse outcomes. And few would be aware that the Chinese economy is likely to grow larger than the United States economy in little more than a decade, making it quite costly for the U.S. to maintain the world's strongest military.

"If a more well-informed public comes to believe that a top priority should be to eliminate the projected shortfall in the Social Security program, in spite of these, and other, much more urgent and unaddressed problems, then we certainly have no objection to taking steps toward closing this gap. However, we will strongly oppose efforts to use fear and misinformation to promote benefit cuts or other changes in the Social Security program."


1. See " The Burden of Social Security Taxes and the Burden of Wage Inequality pdf" and "The Social Security Shortfall and the National Defense Shortfallpdf."

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