The Trustees for the [relevant-to-adsense type=”start”]Social Security[relevant-to-adsense type=”stop”] fund released their annual report on the state of the trust fund last Monday the 23rd. By the media headlines, you would think the end is near, and Social Security will soon be a thing of the past. From Business Week, there was “Social Security Heading for Insolvency Even Faster,” the Los Angeles Times, “Social Security is Slipping Closer To Insolvency,” and from USA Today, “Trustees Report Social Security Outlook Worsening.” Are their dire tones an accurate portrayal of reality? Is Social Security really in crisis or does it merely need small reforms?
According to Trudy Lieberman of the Columbia Journalism Review, the mainstream media has been giving Social Security a bad rap for years. In an April 18th article, she wrote:
“For nearly three years CJR has observed that much of the press has reported only one side of this story using “facts” that are misleading or flat-out wrong while ignoring others. Whatever the reason—ideology, poor understanding of how the program works, gullibility, or plain old reportorial laziness—news outlets have given the public a skewed picture of the financial health of this hugely important program, which is the sole source of retirement funds for millions of Americans and will continue to be for decades to come.”
The headlines on Monday and the stories that went along with them were typically grim with the mainstream media continuing to portray Social Security in misleading ways. A closer look at what the Trustees had to say reveals that it wasn’t exactly good news, but it was not the death knell for Social Security either. Where previous projections showed that the fund would pay out benefits in full through 2036, this has been adjusted to 2033, with payouts at 75% of benefits thereafter. Medicare benefits are still projected to pay out through 2024, the same as previously predicted.
The articles mentioned above didn’t mention one important contributing factor to lowered calculations: payroll tax cuts. [relevant-to-adsense type=”start”]Bernie Sanders[relevant-to-adsense type=”stop”] warned that this sort of depletion of the Social Security fund was a predictable consequence of extending the cuts when he voted against doing so. He’s concerned that Social Security is stressed enough, and proposed that alternative forms of tax relief be used instead of payroll tax cuts.
Anyone concerned about Social Security agrees that the program is indeed stressed. As David Welna of NPR wrote:
“Fact No. 1: Last year, for the first time in its 75-year history, Social Security took in less money than it paid out.
Fact No. 2: This year, the first of the baby boomers reached retirement age and began collecting Social Security benefits.
Fact No. 3: The payroll tax holiday that Congress approved a year ago reduced Social Security’s revenues this year by $105 billion.”
These facts reveal a successful government program facing harsh headwinds. There are more people using the program than ever as fewer pay in. The money that was supposed to be going into the fund has been repeatedly reduced by payroll tax cuts.
And that is what is so laudable about Social Security. In the face of these facts that signify tremendous economic and demographic challenges to the program, it is still financially solid for at least the next two decades without any intervention. The National Committee to Preserve Social Security and Medicare (NCPSSM) points out that with a few minor adjustments, there is no reason that Social Security has to face bankruptcy. For example, lifting the payroll tax cap that stops the collection of payroll taxes on incomes above $110,000 would keep Social Security solvent for nearly 75 years.
The NCPSSM has a truth squad website to work against the many myths about Social Security that opponents of the program continuously circulate. There are reasoned responses to each of the myths about Social Security and Medicare provided by advocacy organizations like AARP and NCPSSM. My personal favorite is the myth that you’ll save better for retirement on your own. In response, AARP points out that a couple needs to save $530,000. Most Americans are far more likely to need Social Security than are able to save or invest that amount.
In a statement on the Trustee’s Report from the Center for Budget and Policy Priorities, they wisely note that Congress needs to act sooner rather than later particularly to avoid radical, last-minute fixes to a program that does need long-term reforms. However, the Center also critiques the media’s account of the state of Social Security by correcting the myth that Social Security is going bankrupt. Similarly, economist and author of author of Social Security: The Phony Crisis, Dean Baker, is fighting the uphill battle of pushing back against the media’s continuous reinforcement of the message that Social Security is doomed.
In response to the Trustee’s Report, he pointed out another media misconception. They frequently report that the reason the Social Security fund is strained is from the impact of the baby boomers. Baker notes that adjustments to Social Security were already made in the 1980s to account for the baby boomers. In actuality, the reason the fund has not stayed on its projected path is related to inequality. Specifically, economists had estimated the models to have a certain level of wage growth which has not occurred. Meanwhile, the number of people earning wages above the payroll cap has increased from more than 10% in 1983 to more than 18% today.
It is difficult for me to find people in my generation of people who believe the program will exist when they retire in 2036. This appears to be the outcome of a long-term campaign by Republicans to undermine the strength of the Social Security program by shaking the public’s belief in it. Whether it comes from being owned by conservative media moguls or some other bias, the mainstream media has been effectively purveying misleading information about Social Security for years. The continuous attacks have led the program to become so vulnerable, even Democrats have discussed cuts to the program. While changes need to be made to Social Security, Republicans want to capitalize on public fears about its future to make dramatic changes to a program that fundamentally works and has done so for over 75 years. Liberals will need to rally to protect one of their greatest achievements from the coming onslaught, and they have to do it without the honest reporting of the media.