http://www.salon.com/opinion/feature/2009/05/12/social_security/ today
You are about to be hit by another wave of disinformation about how Social Security is going broke and needs reforming (meaning, your benefits must be cut). It's not true.
By Michael Lind
May 12, 2009 | On Tuesday, May 12, the trustees who oversee Social Security and Medicare will issue their annual report. I don't know what will be in the report. But I do know what the response will be. Conservatives, libertarians and center-right Democrats will take whatever the report says as evidence that there is an "entitlement crisis," which should require us not only to address spiraling healthcare costs (a genuine issue, affecting the private sector as well as Medicare and Medicaid) but also the alleged "crisis" of Social Security (an imaginary problem).
The coalition of libertarian zealots, Jeffersonian conservatives, center-right Democrats and bankers and brokers who would like to earn fees or commissions from the diversion of Social Security payroll taxes into IRAs recycles the same arguments against Social Security, rain or shine, boom or bust. They've been doing it for more than a quarter-century, ever since a couple of libertarians wrote up a guide for small-government conservatives on how to spread doubts about a popular, solvent and effective entitlement. These tried-and-true arguments will be dusted off and dragged through the media once again, after the latest Social Security Trustees' report is published. Among the bogus arguments you can expect:
The date at which Social Security will become bankrupt has advanced! From annual report to annual report, the two key dates -- the date at which Social Security payouts from the Trust Fund exceed payroll tax intake, and the date at which the Trust Fund is exhausted -- advance or retreat, depending on the contemporary economy and changes in calculations. For example, in 1997 payouts were supposed to exceed revenues in 2012 and the Trust Fund was supposed to be exhausted in 2029. By 2004, the trustees were more optimistic: The two dates were 2018 and 2042, respectively. If as a result of today's bad economic conditions future growth rates are revised and the two dates are slightly closer to the present in the latest report, should you be concerned? No. Relax. When estimates vary so much, it would be crazy to try to make public policy for the United States of nearly half a century from now.
We have only two choices, or a combination -- cutting benefits or raising the payroll tax. False. There are at least two other choices that the deficit hawks never mention. One is more rapid economic growth, which would make it easier to pay Social Security taxes in the future without either benefit cuts or tax increases. The other option that the doomsayers never discuss is an infusion of money from other revenues, to supplement the payroll tax. Medicare is already paid for partly by a payroll tax and partly by general revenues. Why not cut the payroll tax and make up the difference out of general federal taxes? If you want to be revenue-neutral, the Social Security shortfall of about 2 percent of GDP between now and mid-century could be patched with general revenue funds diverted from defense, if without endangering our safety we could gradually lower defense spending from its present wartime level of about 4 percent of GDP to 2 percent, which is more than most other advanced industrial countries spend on defense.
Social Security and other entitlements are responsible for unfunded liabilities of more than $100 trillion -- and as the baby boomers begin to retire, the bill is coming due! Total nonsense.
About a decade ago, conservative and libertarian economists who oppose Social Security, Medicare and other entitlements came up with a clever rhetorical strategy. They would calculate the gap between the payroll taxes that pay for these programs and estimated costs over time. But there was one problem: The gap isn't all that scary, at least in the near future. So in order to frighten the American people and their elected leaders, deficit hawks cite the sum total of Social Security's "unfunded liabilities" over 75 years. But even this -- a paltry $4.3 trillion over three-quarters of a century, according to the 2008 report -- isn't sufficiently terrifying.
...more...
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