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Home Publications Blogs Beat the Press CBS Joins the Attack On Social Security

CBS Joins the Attack On Social Security

Friday, 26 November 2010 07:40
CBS News apparently now considers objectivity old-fashioned as it told viewers:

"As more boomers pack it in, the number of Americans collecting Social Security retirement benefits is projected to nearly double over the next 25 years to more than 76 million. The system won't be able to handle the strain without an overhaul."

Well, no that is not true. The projections from the Congressional Budget Office (CBO) show that the system can pay all benefits through the year 2039 with no changes whatsoever. The Social Security trustees are somewhat more pessimistic showing that full benefits can be paid through the year 2037 with no changes at all. By 2039 the oldest baby boomers will be age 93 and the youngest will be 74. By 2037, the oldest boomers will be 91 and the youngest 73.

This means that by both the CBO and the trustees projections, most of the retirement of the baby boomers can be supported with no change whatsoever. Furthermore, even after this date, the program would still be able to pay close to 80 percent of scheduled benefits, assuming no changes are ever made. This makes the use of the term "overhaul" somewhat dubious. If a change of the sort put in place by the Greenspan commission back in 1983 was implemented in 2030, it would make the program fully solvent through the rest of the century.

The country did not begin to prepare for the 1983 changes in 1963. There is no obvious reason that the country need to act now to change Social Security, even if CBS News apparently wants us to.

It is unfortunate that CBS chose to advocate its position on Social Security rather than inform the public. Since many people are under the impression that they will receive no Social Security benefit, it would have been helpful if CBS had pointed out this is not possible unless Congress votes to end the program.

It would have also been helpful if CBS noted that every official projection shows that workers will on average be far richer in 30 or 40 years than they are today. Groups like the Peter G. Peterson Foundation have spent vast sums of money trying to convince the public that workers on average are getting poorer through time. While many workers have gotten poorer, this is the result of the upward redistribution within generations to rich people like Peter G. Peterson (a successful investment banker). It is certainly possible that the continued upward redistribution of income will leave most workers poorer in the future than they are today, but this will be a question of intra-generational inequality, not inter-generational inequality.

Comments (10)Add Comment
pennywise, pound foolish
written by frankenduf, November 26, 2010 8:20
the real dilemma, as Dean constantly points out, is health care cost- when the boomers start to blow their knees out en masse, the health care system will buckle (i am optimistic this will force single payer to be adopted)- and, of course, if we can bring down the cost 'boom' to manageable levels, the ss cost will be fully funded ipso facto- cbs is worried about $500 checks while putting the bill for the $50,000 knee replacement on the back burner- cbs news apparently now considers prioritization old fashioned...
written by skeptonomist, November 26, 2010 9:09
What is most important to understand is that what retirees are paid in 2050 (say) is not dependent on any decisions that have to be made now about the SS program itself. The baby boom and the large surplus in the Trust Fund will both have expired and SS will be back to the way it operated for its first 50 years, that is money will be collected from wages and salaries and paid out immediately to retirees. The scale of this transfer will be determined at that future time through decisions made by Congress. Any planning or adjustments that have to be made now concern the rate at which the large surplus in the Trust Fund is paid out to boomers - a very minor matter with respect to future deficits in comparison to decisions about income tax rates and the way health-care programs are run.

As Dean says projections indicate that workers will have much more real income in the future, but these projections have been wrong in the past - in fact past overestimation of worker income is one reason for the supposed "shortfall" in SS income in 30 years or so. If the continuing increase in income inequality is not reversed workers may not have enough to live on themselves let alone support a larger retired population.

The public confusion about SS - people think they won't get any money on retirement - apparently stems from the completely incorrect idea that the Trust Fund is itself the program, that SS is an investment fund like a private retirement plan. This should probably be the first thing addressed in any explanation of the future of SS.
..., Low-rated comment [Show]
Good to see Dean Baker highlight that segment.
written by Quiddity, November 26, 2010 11:18
Of note, the talking heads were:

-o- Andrew Biggs of the AEI saying that (a) people living longer is a problem, and (b) Social Security was intended to only be a program to keep seniors out of poverty.
-o- Erskine Bowles, saying that this nation has made promises that it cannot keep.
-o- Doris Kerns Goodmwin saying that Social Security was (partially) intended to get seniors out of the workforce so that younger people could get jobs.
-o- Rep. Paul Ryan saying that raising the retirement age is the way to go.
Quiddity said:
written by diesel, November 26, 2010 11:49
"Andrew Biggs of the AEI saying that... Social Security was intended to only be a program to keep seniors out of poverty."

I had read the same point being made somewhere else in etherland. It's puzzling. What kind of lifestyle do they envision for seniors? I mean, one either lives in a house or one doesn't. One either has enough food to eat or one doesn't. Do they mean that seniors should return to the lifestyle of the thirties where they could expect to manually pump water from a well? Heat their water on the stove? Scrub their patched clothes on a washboard?

What does the phrase "keep seniors out of poverty" mean?

It sounds okay when talking about the other guy, but not so hot
when contemplated for oneself. And just how much money is left over for riotous living after rent, food and transportation are subtracted from the typical SS benefit?
A Vast Right-Wing Conspiracy
written by Paul, November 26, 2010 2:17
The history of the anti-Social Security right wing is very clear: from 1935 to the present, they have vehemently opposed the system as socialism (apparently the aged must fend for themselves as rugged individuals). Since they haven't won that argument, they now claim that SS is a bankrupt "Ponzi Scheme" that must be decimated or turned over to the tender mercies of Wall Street.

That Katie Couric could fall for such bunk is truly mind boggling. They are making a fool of her more than she made a fool of Sarah Palin (perhaps this is the right-wing's revenge).
The History of SS
written by NewsFromAnnArbor, November 26, 2010 4:11
The 1930's is interesting due to the fact that a number of innovative ideas were considered. One of them was a plan to pay people age 60 or older $200/month for life. It is my understanding that SS was put forward as a way of cutting off support for this plan. I am tired of debating in public proposals to "save Social Security". Nobody knows for sure what the economic climate will be in 2037. I say give the Social Security system several options to fund itself (tax on wages, tax on securities transfers, etc.) and let Congress vote each year on the tax rates that would achieve balance in funding (outgo equals income.) Require that SS neither run a surplus nor deficit over a specified time interval; this would ensure funding in perpetuity.
1983 WAS the overhaul
written by Melissa, November 27, 2010 9:42
CBS News was definitely confused, but this time, Dean, I think you are too. My understanding is that the 1983 Greenspan-led overhaul was exactly to prepare for the boomers' retirement, by having not just one but two (or even three) generations pay in advance both for the then-current retirees as well as into the trust fund in preparation for the boomers. So the overhaul needed for the boomers already happened, and my generation has been paying for it our entire adult lives. On the other hand, Dean, your comment about 1963 doesn't make sense, since the 1983 overhaul was 20-30 years ahead indeed, and not to solve an immediate problem of the time as you imply.
written by Janet Morrison, November 27, 2010 4:44
I am 87 years old and have heard more times than I can count how insolvent Social Security is and cannot be depended upon. I am so grateful for Gene Lyons' article "Government is Just Like Your Family" printed in our small newspaper The Daily NewS Sun, Sun City and Sun City West edition. He led me to your excellent website which I now read every day. The media has joined in the fray as Republicans use deficit reduction every time except it is one of their own running the deficit (Reagan). The alarm has been sent out and, of course, they throw in Social Security to further frighten the middleclass. What frightens me is the lack of thorough research on the part of the Washington Post. PBS Newshour should also do a better job of research. David Brooks should know better, too. Thanks for the introduction to you and your ideas. You are right about our lack of a decent Health Plan to cover everyone. That is where the big waste is.
The American media and the American working people have nothing in common.
written by Scott ffolliott, November 28, 2010 11:02
The American media and the American working people have nothing in common.
It seems that the cooperative/competitive news media, broadcast, cable and newspapers and magazine are more insidious speakers of "newspeak" and Orwell can ever have imagined.
The have privatized Big Brother.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.