Social Security Advocates Fight to Keep Program from Fiscal Cliff

Social Security Advocates Fight to Keep Program from Fiscal Cliff

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Photo: Franklin D. Roosevelt signing Social Security law, 1935.

Editor’s Note: This week’s fiscal-cliff hanger begs the underlying issues of how Social Security became hostage to political strategies aimed at cutting the program. Peter McDermott of the New York-based Irish Echo looked into the background of how Social Security ended up on the budgetary bargain table. He wrote this story was done as part of the MetLife Foundation Journalists in Aging Fellows Program, a collaboration of the Gerontological Foundation of America and New America Media.

NEW YORK--Call it Martha Raddatz syndrome. It’s the belief held by some media professionals that there’s something broken in Social Security. And it’s a debatable assumption that has played out through the “fiscal cliff” coverage.

Raddatz, a noted international correspondent for ABC News, was criticized for a question she posed while moderating the vice-presidential debate by a number of speakers at the recent Gerontological Society of America conference in San Diego.

“Media elites have convinced themselves that there is a crisis in Social Security,” said Eric Kingson, a professor of social work at Syracuse University and co-chair of the advocacy group Social Security Works.

Media’s Conservative Framing

Kingson, who served as a policy advisor on presidential commissions on the issue in the 1980s and ’90s, said there is indeed an increasing crisis around adequate funding for retirement in America.

“But they [journalists] focus on the most conservative framing of the crisis,” he said.

In reality, Kingson added, “Social Security is the one bright spot” in the federal government.

During the vice-presidential debate, Raddatz asked: “Let’s talk about Medicare and entitlements. Both Medicare and Social Security are going broke and taking a larger share of the budget in the process. Will benefits for Americans under these programs have to change for the programs to survive? Mr. Ryan.”

Rep. Paul Ryan, R-Wisc., replied: “Absolutely. Medicare and Social Security are going bankrupt. These are indisputable facts.”

But speakers at the conference said that while details, such as how Social Security’s annual cost of living adjustment is calculated might be complex, the fundamentals aren’t. They said the self-funding Social Security—mainly through payroll taxes--is not broken and nor is it going broke. Indeed, the system’s finances are secure through the year 2033. After that, without any adjustments the program would only be able to make 75 percent of payments, according to the Social Security Trustees.

Los Angeles Times business columnist Michael Hiltzik, a rare journalist who understands the issue in Kingson’s view, believes even that prediction for 2033 must be looked at critically. Hiltzik has written, “Will this happen? It might, but it might not.” The trustees themselves warn every year that the forecast is “inherently uncertain.”

Hiltzik, who addressed reporters attending the San Diego conference, asked how come “so much of the ‘fiscal cliff’ debate in Washington is based on supposedly perfect knowledge of conditions that are 20, or even 70, years away.”

He asked his audience to think of unforeseen events that have shaped the economy in the past two decades. In a column published soon after the conference, Hiltzik wrote, “Here's my list: 9/11. The Afghan war. The Iraq war. The housing bubble. The crash of 2000. The crash of 2008. The crash of Lehman Bros. The iPod. The iPhone. The iPad. The founding of Google. Hurricane Andrew, Hurricane Katrina, Superstorm Sandy. Obamacare.”

Hiltzik continued, “What are the chances that another such list will make the U.S. economy in 2033 look utterly different from what we imagine in 2012? I'd say 100 percent.”

Kingson and other advocates argue there are numerous ways to deal with Social Security’s projected shortfall. One would be ending the Bush tax cuts on top earners. Another would be abolishing the current cap on how of one’s salary is subject to the payroll tax. In 2013, that limit is $113,700; earnings above that are not taxed.

“Back in 1982, we had a genuine crisis,” recalled Kingson, who served as a staff analyst for the 1983 Greenspan Commission, chaired by then-future Fed Chairman Alan Greenspan. “Congress acted and put the system on a very good course.” Generally over the decades, there was a consensus about the issue. “Very good decisions were made by Republicans and Democrats,” he said.

Kingson’s co-chair of the group Social Security Works, Nancy J. Altman was Greenspan’s assistant and once worked as a legislative assistant for Republican Senator John C. Danforth.

“It was a different time,” Kingson said.

“Leninist Strategy” to Privatize Social Security

Besides Social Security, private pensions haven’t kept up since the 1980s, he observed, and the benefits of U.S. economic growth have been redistributed upwards to the richest 1 and 2 percent of the population.

Now, when it’s needed more than ever, the Social Security system is under ideological attack from the right, with the goal, Kingson said, “of taking it apart brick by brick.”

Despite its huge popularity with American citizens, Social Security is anathema to many conservative ideologues, being a “collectivist” government program. “Medicare, Medicaid and Social Security: That’s the brass ring for them,” the Syracuse University professor said.

Kingson cited a 1983 essay that outlined how conservatives could advance the cause of Social Security “reform.” The influential article, titled “Achieving a 'Leninist' Strategy,” Stuart Butler and Peter Germanis, appeared in the libertarian Cato Institute’s journal.

Said Kingson, “It provided a roadmap: Tell people of 55 and over: ‘Be happy, don't worry.’ Tell the younger people that it won't be there for them and that it would be better if it were privatized.”

If it had been privatized 30 years ago, Kingson said, “we would have had a national calamity in 2008,” referring to the financial crash.

Privatization was once an extreme idea, but conservative think tanks have had remarkable success in mainstreaming it. For instance, the media now talks in terms of “entitlement” when referring to a program that American citizens pay for.

Kingson said: “They’ve turned an innocuous 11-letter word into a four-letter word.”

But what some conservative journalists label a “Ponzi scheme” pays out in New York State alone an annual $44.8 billion to 3 million people (16.7 percent of residents). The average annual benefit in the state is $13,641.

In a time when home equity has declined and 401k plans have lost value, the “one system that works is Social Security.”

Kingson said: “It’s not a savings account. It’s social insurance.”

“A Solution Not a Problem”

President Franklin D. Roosevelt said in signing the Social Security law in1935, “We have tried to frame a law, which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age.”

FDR continued: “The law will flatten out the peaks and valleys of deflation and of inflation.”

“We’ve put strong protections in place and have been able to maintain them over time,” Kingson said. “It’s a solution, not a problem. It’s critical that we strengthen this institution.”

In a phone interview in December, Kingson stressed that during the holiday season “all religions have a similar message. You care for your neighbor and you care for older people, but you also have an obligation to work hard.”

“Social Security is a way that complex societies can put this into effect,” Kingson said.



 

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