Comment & Debate
Nobel Laureate economist Paul Krugman. “Inventing a crisis.” New York Times. December 7th, 2004: “[T]here is a long-run financing problem. But it’s a problem of modest size. The [CBO] report finds that extending the life of the trust fund into the 22nd century, with no change in benefits, would require additional revenues equal to only 0.54 percent of G.D.P. That’s less than 3 percent of federal spending — less than we’re currently spending in Iraq. And it’s only about one-quarter of the revenue lost each year because of President Bush’s tax cuts — roughly equal to the fraction of those cuts that goes to people with incomes over $500,000 a year. Given these numbers, it’s not at all hard to come up with fiscal packages that would secure the retirement program, with no major changes, for generations to come.”
A liberal think tank, The Center for Economic and Policy Research, says that “Social Security is more financially sound today than it has been throughout most of its 69-year history” and that Bush’s statement should have no credibility.[1]
Paul Krugman. “Social Security Scares.” New York Times. March 5, 2004: “The annual report of the Social Security system’s trustees reveals a system in pretty good financial shape. In fact, it would take only modest injections of money to maintain that system’s current benefit levels for at least the next 75 years. Other reports, however, appear to portray a system in deep financial trouble. For example, a 2002 Treasury study, described on Tuesday in The New York Times, claims that Social Security and Medicare are $44 trillion in the red. What’s the truth?
Here’s a hint: while even right-wing politicians insist in public that they want to save Social Security, the ideologues shaping their views are itching for an excuse to dismantle the system. So you have to read alarming reports generated by people who work at ideologically driven institutions — a list that now, alas, includes the U.S. Treasury — with great care.
First, two words — and Medicare — make a huge difference. According to the Treasury study, only 16 percent of that $44 trillion shortfall comes from Social Security. Second, the supposed shortfall in both programs comes mainly from projections about the distant future; 62 percent of the combined shortfall comes after 2077.
So does the Treasury report show a looming Social Security crisis? No.
Social Security’s problem, such as it is, is a matter of demography: as the population ages, the number of retirees will rise faster than the number of workers. As a result, benefit costs will rise by about 2 percent of G.D.P. over the next 30 years, and creep up slowly thereafter. By comparison, making the Bush tax cuts permanent would reduce revenue by at least 2.5 percent of G.D.P., starting now. That — combined with the fact that Social Security, unlike the rest of the federal government, is currently running a surplus — is why the Bush tax cuts are a much bigger problem for the nation’s fiscal future than the Social Security shortfall.”
James Roosevelt, President & CEO Tufts Health Plan. “Social Security at 75: Crisis Is More Myth Than Fact.” Huffington Post. August 11, 2010: “Understanding that the public will not succumb to a frontal assault on Social Security, Tea Party supporters, Libertarians and other critics advance their radical agenda by creating a “mythology of fear” trotting out themes of a program that is “in crisis,” “bankrupt,” “broke,” and, in the wake of the Madoff scandal, even a “Ponzi scheme.” They then position themselves not as wanting to eliminate Social Security but as wanting to “save, “strengthen,” and “protect” Social Security by privatizing it.
Social Security does not need to be saved. The fact is, Social Security has been the most successful government program of the past 75 years. Today, 53 million Americans receive Social Security benefits each month. No other program in American history — has touched more lives and families and brought more financial stability to households -including those of is most ardent critics.
The Social Security Administration should do more to debunk the reprehensible fear campaign against the program. Public figures who support the program – including the president- should add their voices in support and work to calm the rhetoric.”
Henry Aaron. “Privatizing Social Security: A Bad Idea Whose Time Will Never Come.” Brookings Institute. Summer 1997: “How Big Is the Problem? Between 1997 and 2035, the cost of Social Security is projected to rise 2 percent of gross domestic product. The increase, over nearly 40 years, is the same as that in the cost of Social Security from 1970 to 1982—just 12 years—and the drop in defense spending from 1989 to 1996—just 7 years. The point is not that any of these shifts is negligible. It is that the past changes in the costs of Social Security and national defense were as large as the projected change in Social Security costs and happened far faster, but without being seen as either a huge challenge or an enormous windfall. A little perspective is in order.”