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Home Publications Blogs Beat the Press CNN Forget to Look at Its Chart When Warning of the "Burgeoning Cost" of Social Security

CNN Forget to Look at Its Chart When Warning of the "Burgeoning Cost" of Social Security

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Tuesday, 24 April 2012 15:24

It's always a good idea to look at the data that you present to readers when you write about it. It appears that CNNMoney forgot to do this in an article whose first sentence warned of the, "the burgeoning costs of Medicare and Social Security."

The chart shows a modest uptick in the cost of Social Security, measured as a share of GDP, over the next two decades, then a line that is essentially flat over the remaining 55 years of the projection period. Medicare does have costs that could be called "burgeoning," but that is the story of our broken private health care system.

Comments (5)Add Comment
The end isn't near
written by Pete Peterson, April 24, 2012 7:43
The oldest available Social Security Trustees report, from 1997, states that the SS Trust Fund was anticipated to run out in 2031. The current report brings it back to 2033 from 2036. By my count, the program is still better off than was predicted 15 years ago. I fail to see how that is a crisis.
30 options, lots of combinations, not just 3
written by Robert Salzberg, April 24, 2012 7:57
   The article also says:

"In order for Social Security to remain fully solvent over the next 75 years, policymakers in theory could do one of three things, the trustees said last year:
Immediately jack up the payroll tax to 14.55%. Workers and their employers currently pay 12.4% (6.2% each) on the first $110,100 in wages.
Cut benefits by 13.8%
Or some combination of the two."

    The CBO looked at policy options last year but studied 30 options in 5 general categories.

   My favorite, option #4, is to eliminate the taxable maximum which would extend the trust fund to 2083.


http://www.cbo.gov/publication/21547

I can't imagine the Social Security Trustees would have so narrowly limited their options last year. I'd love to see the citation.
Older Social Security Reports available
written by Bruce Webb, April 25, 2012 8:52
"The oldest available Social Security Trustees report, from 1997,"
This link has all Reports back to 1941.
http://www.ssa.gov/history/reports/trust/trustreports.html

In fact the very first Report, that of 1941 is worth reading. In doing so a lot of myths about how Social Security "changed" or "was changed" to betray its original goal are dispelled. The Social Security Insurance program outlined in the 1941 Report is in all important respects identical to the one today, with the exception of the Disability component added in 1956.
They always so limit those options
written by Bruce Webb, April 25, 2012 8:58
"I can't imagine the Social Security Trustees would have so narrowly limited their options last year. I'd love to see the citation."

The Trustees quite deliberately defer policy to Congress. Their "options" are not realistic proposals and previous fixes have never come in such stark form, instead they are just arithmetic expressions of the problem in its simplest forms of "fix it tomorrow" vs "don't fix it at all". Historically something closer to CBO option 2 has been adopted.
CBO Options
written by coberly, April 25, 2012 10:20
Bruce is correct.

CBO Option 2 is to raise the payroll tax one tenth of one percent per year over the next twenty years. This would make Social Security "solvent" for the next seventy five years.

Between now and then... especially after having seen that one tenth of one percent per year doesn't hurt... people could agree to "do it again" and make Social Security "solvent" forever.

I prefer this to Option 4, which would require raising the tax on the rich. That may sound like a good idea, but it's a bad idea for Social Security, which has always been paid for by the people who get the benefits. And this protects them from the politics of welfare. It is also not a good idea to depend on the kindness of the rich when you can avoid it... for what amounts to saving an extra forty cents per week each year so that your own savings will pay for your own retirement.

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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.

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