SAN FRANCISCO--To read this week’s mainstream headlines on the new Social Security Trustees Report, you’d think the barriers to our retirement future were higher than Fenway Park’s vaunted Green Monster. What the report actually shows, however, is that the nation’s retirement system is, more precisely, as durable as Boston’s vaunted emerald wall, which was celebrated for its 100th anniversary last week.
Factual reporting on the staying power of government programs, though, doesn’t drive much website traffic. On Monday, the PBS News Hour headed an online page for the debate they aired about the report, “Social Security Slated to Run Dry in 2033, Trustees Warn.”
USA Today’s headline was “Trustees Report Social Security Outlook Worsening." U.S. News & World Report echoed, “Social Security, Medicare Outlooks Worsen," and the New York Times sniffed, “Social Security’s Financial Health Worsens.”
The alarming headlines evoking images of our children’s retirement strewn in fiscal wreckage would be enough to rattle the knees of most Americans, like Red Sox hitters* having to confront Chicago’s perfect-game pitcher Philip Humber. But Social Security is a long way from zeroing out in the box scores.
For mainstream news headlines to state these programs will “run dry” is misleading at best and in some cases plainly false. The 2012 trustees report makes clear that even though the poor economy and related factors have somewhat diminished payroll taxes that support Social Security, the program will still net $57.3 billion this year, increasing the Social Security Trust Fund to $2.7 trillion—and growing.
A more apt headline, suggested progressive journalists Richard Eskow on Huffington Post, would be "Social Security Trust Fund Even Larger Than It Was Last Year" or, he adds wryly, "Public Consensus Grows For Taxing Wealthy to Restore Long-Term Entitlement Imbalance."
There is enough money building up in the retirement trust fund, says the trustees report, that without any changes in its financing, Social Security will be able to meet all of its obligations to retirees over the next two decades (through 2033). And for 51 years beyond that, the program – again, with no fiscal tweaks – could pay 75 cents on the dollar of what’s owed to Americans.
That’s because even if the trust fund were to run out, money would still flow into the program from ongoing payroll taxes. Few news reports bother to explain that the Social Security Trust Fund is a cushion that was added to the program almost 30 years ago, precisely so the retirement costs of baby boomers would not be entirely dumped on later generations.
The annual trustees report also covers Medicare, which it projected will, just as last year, max out in 2024. Medicare is a far more complex issue, but even there, too few reporters bother to mention that no matter how much the feds tinker with the program, it’s costs will continue to rise beyond medical inflation until the United States truly gets a handle on controlling health care costs, in both public and private markets. But for now, say the trustees, Medicare’s finances are no worse off than last year.
Regarding Social Security, though, anyone can disagree on anything but the facts.
Professional journalists, though, are obliged to separate fact from friction. Striking flints of contention is fine when interpreting facts in, say, a blog. A writer may well, for instance, buy into the conservative refrain that Social Security is a “Ponzi” scheme and the trust fund is nothing but a wad of worthless IOU’s—but only after explaining that the IOU’s are legally protected Treasury Bonds that the federal government buys and pays interest on rates in order to borrow money from the program.
You say “worthless,” and I say as much protected by the “full faith and credit of the United States” as a dollar bill—or similar U.S. treasuries bought by China as the safest investments on earth—even in this current economic crisis.
Get us a couple of ballpark brews, and we can argue the merits into extra innings. Argue, if you like, that the bat is illegally “corked” for more oomph, and the last pitch was a spitball. But don’t tell the public that the balls and bats on the field are nothing but holograms.
Following are just a few facts about Social Security that writers can argue over, but cannot deny:
• Social Security is prohibited by law from contributing to the federal deficit -- it cannot borrow from the tax-supported federal budget and would be prohibited from paying benefits if it failed to have enough income and assets to meet its costs. Social Security is in its own fiscal bubble. The money that goes into it from workers stays there—and can’t go into or out of the U.S. budget. So proposals in Congress to reduce Social Security benefits (such as by raising the full-retirement age) would not subtract a single penny from the federal debt.
• Social Security could pay all benefits in full and on time through 2087, with a relatively modest increase in revenues. One way, says the 2012 Trustees Report, would be to deduct another 1.1 percent from workers wages, matched by employers. Less regressive approaches would be to place a transaction tax on sales and purchases of stock, a tax on the assets of very large estates, or by lifting the cap off the payroll.
Currently, affluent Americans only pay the tax up to their first $110,100 in taxable earnings. A millionaire pays not a penny of tax on the next $889,900. Right now the richest 6 percent of U.S. wage earners stop paying their fair share for every dollar above that amount.
What about that scary sounding speed-up in the 2012 report estimating that the Social Security Trust Fund will be depleted three years earlier than the trustees predicted last year (2033 instead of 2036)?
Speaking Monday on the PBS News Hour, Nancy J. Altman, author of The Battle for Social Security and co-director of the advocacy group Social Security Works, noted that the “Social Security system from the beginning has been very closely monitored and has always been very conservatively managed. So every year, it projects out 75 years. Now, when you project out that far, you are going to show these fluctuations. Recent trustees reports have shown that the exhaustion date is 2028. Others have shown 2048. So 2033, 2035, 2036 are all within that range.”
Baseball aficionados understand fluctuations—especially Red Sox fans, given last years monumental fall from first place. And so do Texas Rangers fans, whose team got to the World Series instead of Boston. But Social Security’s actuaries work with a planning horizon of 75 years, over which a fluctuation of two or three years in a tough economy with high unemployment (less paid in payroll taxes) may well be cause for concern but hardly long-term panic.
How many solutions can dance on the head of a congressman? The point is that Social Security is relatively easy to fix, and experts have proffered reasonable solutions—no, entire menus of solutions--that our leaders could assemble to achieve long-range solvency. Many combinations of fixes could be packaged into a solution without taking vital dollars out of the pockets of the oldest and most vulnerable Americans.
Far from being a Green Monster, with some adjustments Social Security would provide Americans with a stable economic future as green as a well-kept major league diamond.
*The only thing rattling in the Red Sox lineup the first time White Sox no-hit pitcher Philip Humer took the mound against them, April 26, were Boston's bats. The Red Sox won 10-3. Fortunately, Social Security is far more durable than any sports metaphor.
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