There Is No Social Security Crisis: Action Alert

By Jeralyn, Section Legislation
Posted on Mon Sep 27, 2010 at 04:40:05 PM EST
Tags: social security (all tags)

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There is no social security crisis. Tell Congress not to make changes.

Alan Simpson (R-WY), the Republican co-chair of the National Commission on Fiscal Responsibility and Reform, and other commission members want to cut benefits, raise the retirement age, and push working Americans into private accounts.

Via MoveOn: The Top Five Social Security Myths: [More...]

Myth: Social Security is going broke.

Reality: There is no Social Security crisis. By 2023, Social Security will have a $4.3 trillion surplus (yes, trillion with a 'T'). It can pay out all scheduled benefits for the next quarter-century with no changes whatsoever.1 After 2037, it'll still be able to pay out 75% of scheduled benefits--and again, that's without any changes. The program started preparing for the Baby Boomers retirement decades ago.2 Anyone who insists Social Security is broke probably wants to break it themselves.

Myth: We have to raise the retirement age because people are living longer.

Reality: This is a red-herring to trick you into agreeing to benefit cuts. Retirees are living about the same amount of time as they were in the 1930s. The reason average life expectancy is higher is mostly because many fewer people die as children than did 70 years ago.3 What's more, what gains there have been are distributed very unevenly--since 1972, life expectancy increased by 6.5 years for workers in the top half of the income brackets, but by less than 2 years for those in the bottom half.4 But those intent on cutting Social Security love this argument because raising the retirement age is the same as an across-the-board benefit cut.

Myth: Benefit cuts are the only way to fix Social Security.

Reality: Social Security doesn't need to be fixed. But if we want to strengthen it, here's a better way: Make the rich pay their fair share. If the very rich paid taxes on all of their income, Social Security would be sustainable for decades to come.5 Right now, high earners only pay Social Security taxes on the first $106,000 of their income.6 But conservatives insist benefit cuts are the only way because they want to protect the super-rich from paying their fair share.

Myth: The Social Security Trust Fund has been raided and is full of IOUs

Reality: Not even close to true. The Social Security Trust Fund isn't full of IOUs, it's full of U.S. Treasury Bonds. And those bonds are backed by the full faith and credit of the United States.7 The reason Social Security holds only treasury bonds is the same reason many Americans do: The federal government has never missed a single interest payment on its debts. President Bush wanted to put Social Security funds in the stock market--which would have been disastrous--but luckily, he failed. So the trillions of dollars in the Social Security Trust Fund, which are separate from the regular budget, are as safe as can be.

Myth: Social Security adds to the deficit

Reality: It's not just wrong -- it's impossible! By law, Social Security funds are separate from the budget, and it must pay its own way. That means that Social Security can't add one penny to the deficit.1

Sources:

1."To Deficit Hawks: We the People Know Best on Social Security" New Deal 2.0, June 14, 2010

2. "The Straight Facts on Social Security" Economic Opportunity Institute, September 2009

3. "Social Security and the Age of Retirement"Center for Economic and Policy Research, June 2010

4. "More on raising the retirement age" Ezra Klein, Washington Post, July 8, 2010

5. "Social Security is sustainable" Economic and Policy Institute, May 27, 2010

6. "Maximum wage contribution and the amount for a credit in 2010." Social Security Administration, April 23, 2010

7. "Trust Fund FAQs" Social Security Administration, February 18, 2010

8. "To Deficit Hawks: We the People Know Best on Social Security" New Deal 2.0, June 14, 2010

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There Is No Social Security Crisis: Action Alert | 32 comments (32 topical)

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The only entitlement program that (5.00 / 1) (#5)
by Anne on Mon Sep 27, 2010 at 05:52:29 PM EST

needs to be reformed is the one that employs 435 individuals: the US Congress, where an overblown sense of entitlement has led to generally poor representation of the people for whom they are supposed to be working - and by "people," I mean actual humans, not corporations.

Publicly-funded elections would go a long way to putting us back in charge, but I don't see that happening anytime soon.

Sadly, I don't think it will matter how well-educated the American public is about the state of Social Security - when the commission is structured such that the recommendations are coming after the election, to a lame-duck Congress, cannot have amendments attached, cannot be debated and are not subject to filibuster, the only conclusion to be reached is that the fix is in - and not in a good way.

The Commission will do what it has been tasked to do, with the cover of being pre-approved by a Democratic president. Just as we were ignored on health system reform, so will be be ignored on this - because we just don't understand, and aren't smart enough to grasp the extent of the "crisis."

But, hey - don't forget to go out and vote Democratic, because who knows how much worse it will be if Republicans take over!

Biden at a fund raiser in NH (none / 0) (#9)
by MO Blue on Mon Sep 27, 2010 at 06:23:06 PM EST

...he urged Democrats to "remind our base constituency to stop whining and get out there and look at the alternatives. WaPo

Rather than adopt good policies they will continue to blame the voters. Not sure which firm or focus group suggested this tactic but it is definitely the one that the administration is going with.


535 (none / 0) (#10)
by Cream City on Mon Sep 27, 2010 at 06:24:34 PM EST

unless you meant to give the Senate a bye on this stupidity, and I doubt that you do, Anne. :-)

Let all 535 eat catfood for a week and then come on back to tell us about our future.


Alternative Suggestion: (5.00 / 2) (#14)
by MO Blue on Mon Sep 27, 2010 at 06:41:39 PM EST

Since the favorite "fix" among Democratic congresscritters is to raise the retirement age to 70, I think all members of Congress 60 years or older should be required to do 40 hour weeks of hard minimum wage manual labor for a month, members under 60 should be required to hold 2 full time minimum wage manual labor jobs for a month. All members must then spend the next 6 months living on the SS benefits that they would receive from those jobs if they retired at 62 without any of the benefits that they receive from being members of Congress. Then let them tell us that people will be glad to work until they are 70.


: AMEN!!! (none / 0) (#25)
by gyrfalcon on Tue Sep 28, 2010 at 12:29:36 AM EST

Oops! I did mean 535; thanks for (5.00 / 1) (#18)
by Anne on Mon Sep 27, 2010 at 07:33:03 PM EST

catching that!

I seem to remember that there were two or three House members a couple of years ago who decided to try to eat for a month on the amount allotted by food stamps - something like less than $2.00/day; maybe they didn't learn enough to convince their colleagues that benefit cuts are going to kill people.

Maybe we ought to tie Congressional pay to no higher than the maximum benefit being paid by Social Security - kind of like some companies tie executive pay to being no more than some number times the lowest paid employee.

It's really long past time to get some control back.


Commission stacked to make changes (none / 0) (#1)
by MO Blue on Mon Sep 27, 2010 at 05:25:58 PM EST

A key Democrat on President Obama's deficit commission predicted on Wednesday that the bipartisan panel would come up with recommendations to shore up Social Security. "The stars are aligned,'' said Alice Rivlin, a former budget director under President Clinton and now a senior fellow at the Brookings Institution.
"I do expect that some long-run changes in Social Security, both on the benefit side and on the revenue side, are likely to be part of a package," she continued, speaking at a forum hosted by AARP, the lobbying group for senior citizens. "This is a convenient moment to do this. The only better time to fix Social Security than this year is last year or the year before."
...
Rivlin is an important bridge-building figure on the deficit commission. A lifelong Democrat, she is widely respected as an authority on fiscal policy and has insisted that Social Security has serious long-term financial problems. Her positions have often rankled ardent supporters of Social Security, like the labor unions and seniors lobby. link

Defaulting on funding SS will allow them to continue never ending wars and tax cuts for the wealthy (members of Congress fall within this group).

While I agree that we do not (none / 0) (#2)
by jimakaPPJ on Mon Sep 27, 2010 at 05:35:14 PM EST

need to panic over SocSec and make changes, it should be noted that it is a Democratic Pres who has assembled the commission. And he is too good a politican to not have known in advance what the Repub would recommend.

Could it be he is creating a 2012 election issue at the expense of Seniors?

Hopefully Reid and/or Peloso will step up now and condemn the commission thus cutting off the head of the snake before it catches the bird.

lol (none / 0) (#4)
by squeaky on Mon Sep 27, 2010 at 05:49:37 PM EST

Yes, great advice from the right wing... I am sure that your advice is of such great urgency because there are so many of your elected GOP officials who are eager to vote for tinkering with SS...


I'm not sure of the logic behind the theory (none / 0) (#19)
by Harry Saxon on Mon Sep 27, 2010 at 07:59:06 PM EST

that giving the Republicans free rein to come to their own conclusions about SS is some plot to win 2012 at the expense of the Seniors.

But then most Obama=bad! theories seem to suffer from the same deficit.


: Yeah (none / 0) (#20)
by squeaky on Mon Sep 27, 2010 at 08:15:46 PM EST

Tinkering with Social Security has no political upside, imo.
And the votes count.

An issue that enrages senior voters (none / 0) (#11)
by Cream City on Mon Sep 27, 2010 at 06:27:30 PM EST

would be so dumb that -- oh wait, this White House would find a big enough bus to do it. After all, the majority of seniors are women so are already under the bus. So are the seniors who cling to guns and God. So the rest can fit under the bus just fine. After all, they shrink with age, right?


Itty bitty bitter knitters? (5.00 / 1) (#12)
by jbindc on Mon Sep 27, 2010 at 06:31:59 PM EST

Huh? (none / 0) (#13)
by squeaky on Mon Sep 27, 2010 at 06:34:11 PM EST

Whatever measures the Deficit Commission recommends are just that: recommendations.

Congress has to vote any changes. That is not going to happen. Even the GOP is not that stupid.

Sure they can cry about the deficit all they want, but when asked what they would cut all we get is crickets.


Tell it to Jeralyn; it;'s her headline (none / 0) (#16)
by Cream City on Mon Sep 27, 2010 at 07:12:18 PM EST

and I happen to agree with it.

You don't. But you don't really explain why, within the context of Jeralyn's post and links.


Huh? (none / 0) (#17)
by squeaky on Mon Sep 27, 2010 at 07:21:38 PM EST

I never said that I disagreed with an action to tell members of congress that SS is safe?

Please show me where I ever suggested that.

It is a great idea, because the congresscritters know that tinkering with SS is a terrible idea. Letting your representatives know where you stand is always a good thing.


See Jeralyn's headline (none / 0) (#33)
by Cream City on Tue Sep 28, 2010 at 09:03:29 PM EST

and post, and then put your comment in that context. And then, perhaps, you will see.

Or perhaps not. Whatever.


: Not Following You (none / 0) (#34)
by squeaky on Wed Sep 29, 2010 at 12:01:53 AM EST

I saw the headline and the post and signed on the petition.
But I also do not believe for one second that any Senator, and certainly not anywhere near enough Representatives would put their a$$ on the line by voting to tinker with SS.
It is a losing proposition for any Pol, imo.

They're not that dumb (none / 0) (#23)
by gyrfalcon on Tue Sep 28, 2010 at 12:27:15 AM EST

If they recommend reducing SS benefits, which I still doubt would ever get voted in even if they did recommend it, they're NOT going to recommend cutting benefits for people already at or even near retirement age for exactly that reason.

But since the forces of darkness have already convinced most young people that SS isn't going to pay out a cent for them anyway, they can cut the future benefit level without causing that much of a hoo-hah.

I still don't think they'll do even that since it ain't necessary, but we'll see.


The way I heard it being purposed is that (none / 0) (#27)
by MO Blue on Tue Sep 28, 2010 at 07:12:23 AM EST

people 55 and older would be grandfathered in under the current structure. Any benefits cuts, like raising the retirement age to 70, means testing etc., would only apply to people under 55.

I think that it is a definite possibility that they will at least raise the retirement age to 70. It is not necessary to do this for the preservation of SS but is necessary in order to continue their expensive wars, maintain their tax cuts and loop holes for corporations and the wealthy.


Raising the retirement age (none / 0) (#29)
by gyrfalcon on Tue Sep 28, 2010 at 11:16:54 AM EST

does certainly seem very likely, but if they don't do something about the people who do hard labor their whole lives and simply can't keep going that long, I'll be ready with pitchfork and torch to storm the Capitol.

It's not clear to me, however, what any of this has anything to do with the greater budget/deficit problems. Reducing Social Security benefits or raising the retirement age has no impact on anything but the Social Security fund. The SS fund, as I understand it, holds U.S. Treasuries which the government has to pay back when they mature, just like any other holder of Treasuries. I don't believe it's possible, even if it weren't wildly unlikely, to simply default on those particular Treasuries alone in order to avoid paying them back.

The only other route between the SS fund and the general budget, as far as I can tell, would be to modify the law so that the SS fund has to fork over actual cash directly to the general fund. I don't see that happening, either.

This is not my field of expertise, so somebody correct me if I'm wrong, please!


: The objective is to NEVER actually (none / 0) (#32)
by MO Blue on Tue Sep 28, 2010 at 11:28:35 AM EST

have to pay out any funds when the U.S. Treasuries mature. As long as they keep the current payments for benefits lower than what they collect they can continue to roll over the treasuries and have any excess to pay for their wars and tax cuts.

So, dropping to 75% payouts in 2037 is okie-dokie? (none / 0) (#3)
by sarcastic unnamed one on Mon Sep 27, 2010 at 05:35:28 PM EST

I guess it is if you're thinking you're of an age such that you might not be around to be affected by it...

: I'll be 60... (none / 0) (#8)
by kdog on Mon Sep 27, 2010 at 05:59:23 PM EST

I'm planning on bubkis, so even 50% in 2047 would be a pleasant surprise.
I think the younger you are, the less stock you put in the full faith and credit of the US govt. slogan. I was but a tike when Reagan borrowed all that money for Star Wars, imagine what the tikes who are witnessing the Bush/Obama adventures in occupation borrowing are gonna think about it. They don't miss a payment, until they miss a payment.

: Totally not necessary (none / 0) (#24)
by gyrfalcon on Tue Sep 28, 2010 at 12:28:33 AM EST

to cut benefits to fix that.

surplus in US bonds!!! (none / 0) (#15)
by diogenes on Mon Sep 27, 2010 at 06:52:47 PM EST

Social security has a surplus in US Government bonds! When they cash them in to pay out all these benefits, then the actual US government is going to have to find someone else to buy our bonds since I doubt that we will use "budget surpluses" to pay off the treasury bonds held by Social Security.

When private investors and (5.00 / 1) (#21)
by MO Blue on Mon Sep 27, 2010 at 09:50:18 PM EST

foreign countries cash in US Government bonds the actual US government is going to have to find someone else to buy our bonds since I doubt that we will use "budget surpluses" to pay off those treasury bonds either. Why should the government be allowed to entertain defaulting on redeeming the bonds paid for by American taxpayers through FICA deductions?


I don't think it'll happen (none / 0) (#26)
by gyrfalcon on Tue Sep 28, 2010 at 12:30:25 AM EST

I think that there is about a 75% (none / 0) (#28)
by MO Blue on Tue Sep 28, 2010 at 07:31:18 AM EST

chance that it will. Wall Street wants to receive more return on their investment (i.e. campaign contribution and future job opportunities). If not this year, then sometime in the next 5 years. The mechanism (i.e. Cat Food Commission) has been set in place by a Dem without any real push back by a majority of the Dems in Congress. In fact, 36 Democratic senators voted in favor of setting up a bipartisan commission to make deficit-cutting recommendations requiring a fast-tracked, up-or-down vote by the House and Senate. Roll call information It only came up 7 votes short of passing (53 - 46) because some Republicans voted against it due to fears that the Dems might combine the cuts with some form of raising taxes. The general idea, minus working out some kinks, has been sanctioned by both parties. IMO so called liberal Dems have agreed to changes or there wouldn't be statements like this being made.

Sen. Durbin, who is on committee, admonished "bleeding heart liberals" to be open to the idea of scaling back entitlement programs in order to reduce future deficits.

: "Entitlement programs" (none / 0) (#30)
by gyrfalcon on Tue Sep 28, 2010 at 11:25:01 AM EST

doesn't just mean SS. In fact, I may be wrong, but I don't think cutting back SS would have any impact on the deficit, short of the government defaulting on the Treasuries it holds, which ain't gonna happen.
But there are a slew of other big-budget "entitlement programs" (how I hate that term) that are funded through the general budget, such as Welfare and Medicaid (not sure how Medicare is handled) FHA loans, student loans, etc. Maybe even the mortgage interest deduction could be called an entitlement program. All depends on how they define it.
I do love the way even Dems. now are willing to target safety-net programs for the poorest of the poor first when spending on wars and the like gets out of control.

: Oh, and (none / 0) (#31)
by gyrfalcon on Tue Sep 28, 2010 at 11:25:40 AM EST

Durbin is a putz.

Direction of "Cat Food Comission" (none / 0) (#22)
by MO Blue on Mon Sep 27, 2010 at 10:19:45 PM EST

TPM

Thus far, the working group meetings have focused on discretionary and mandatory spending -- and reports suggest two things very clearly: Republicans and some Democrats on the committee are willing to recommend benefit cuts to popular programs, including Social Security, and, possibly, Medicare. But as onerous as those options are to progressive critics of the commission, they've always been premised on the understanding that they only get the green light if paired with commensurate tax reform, making the tax code more progressive and broader-based.

How about the tax code portion to offset deficit?

At a tax reform working group meeting last week, Republicans argued against every possible tax increase. According to one source familiar with the deliberations, Republicans were even opposed to eliminating loopholes, exemptions, credits and other so-called "tax expenditures" unless the associated revenue increase could be used to lower capital gains and corporate income rates.
"Republicans have not even said that we should get any revenue from taxes," the source said. "Even tax expenditures. They appear to want to use the savings on tax expenditures to cut corporate taxes. So shared sacrifices -- except for large corporations who make out even better."