CEPR - Center for Economic and Policy Research


En Español

Em Português

Other Languages

Home Publications Blogs Beat the Press In Reforming Social Security the Problem is Not How Good the Country Is, the Problem is How Good the Political System Is

In Reforming Social Security the Problem is Not How Good the Country Is, the Problem is How Good the Political System Is

Tuesday, 29 March 2011 04:19

Ezra Klein criticizes Social Security supporters for being reluctant to have Social Security reform taken up by Congress at the moment. He argues that Social Security and the retirement system more generally could be restructured to better serve the bulk of the country's workers. Klein notes the fears of Social Security supporters that this could open the door to serious cuts and then responds to these fears, "this country is better than that."

Of course that is true, but also irrelevant. Social Security enjoys overwhelming support from the public. Polls repeatedly show that people across the political spectrum strongly support the program and would even be willing to pay higher taxes to protect the program, but the public as a whole will not directly decide the program's fate.

Congress and the president will decide the future of the program. These politicians live in a world where a willingness to cut Social Security is routinely referred to as a sign of seriousness. Those who do not support cuts are taunted as being unrealistic and weak. Politicians who want to protect the program can expect much less campaign funding from business groups and ridicule from the media.

In this debate, the untrue or misleading claims of Social Security opponents are routinely passed along unchallenged. For example, Wall Street investment banker Peter Peterson has repeatedly said that the $2.6 trillion Social Security trust fund does not exist. Rather than being treated as the equivalent of a flat-earther for denying an obvious truth, Peterson regularly appears as a featured guest on news show and was even invited to a summit on fiscal responsibility at the White House.

It is also absolutely standard for reporters and politicians to lump in Social Security with Medicare and Medicaid as "entitlements" that are unaffordable. This is in spite of the fact that everyone knows that it is the cost of Medicare and Medicaid, driven by exploding private sector health care costs, that is the basis for the large projected budget deficits in future decades.

Klein himself falls into the trap of passing along misinformation about Social Security. He touts a report by Christian Weller at the Center for American Progress without noting that it actually calls for substantial cuts to Social Security. This report calls for significant cuts to be phased in for middle-income retirees (people with incomes over $50,000 a year) and across the board cuts for all retirees.

The latter set of cuts reduce the annual cost of living adjustment for beneficiaries by roughly 0.3 percent a year. This would mean that by age 80, when the plan calls for a bonus payment to kick in, a worker who started receiving benefits at age 62 would have seen a reduction in their benefits of more than 5 percent.

To put this number in context, there is almost no wealthy person in the country who would see their income reduced by as much as 5 percent if the Bush tax cuts on the wealthy were repealed. Yet this proposal has led to massive opposition from the wealthy. Close to a third of the elderly rely on Social Security for 90 percent or more of their income. Two thirds rely on it for more than half of their income. Weller's proposed benefit cut would have more of an impact on the living standards of most Social Security beneficiaries than repeal of the Bush tax cuts on the wealthy would have on their living standards, yet Klein does not even mention it.

It is also worth noting that anyone proposing to cut Social Security benefits to more affluent retirees is targeting nurses and teachers. Because the program is progressive, the wealthy get a small share of the benefits from Social Security. It doesn't matter at all if we take away Warren Buffett's Social Security. To have any impact on the program's finances it is necessary to cut benefits for very middle income workers. People who don't think that high living nurses and school teachers are one of the country's major problems tend to object to seeing these people denied benefits that they paid for.

In principle there are many ways in which Social Security can be improved. However a political and media environment that is dominated by opponents of the program, in which false assertions are deliberately propagated (the vast majority of people under age 50 don't believe that they will get any benefit from the program), is not the best place to have a debate over reform. There needs to be more progress on exposing the misinformation and discredited the people who spread it before the country's most important social program gets a makeover.

Comments (9)Add Comment
Steal Bread, Get Jailed - Steal Wealth, Get More Wealth
written by izzatzo, March 29, 2011 5:57
... Peter Peterson has repeatedly said that the $2.6 trillion Social Security trust fund does not exist.

Known among criminal psychologists as the Peterson Plunder Perversion, this is the manifestation of guilt transferred from the victims themselves - those actually on Social Security - to the SS fund itself.

Like Ted Bundy who blamed non-existent pornography for serial murder, Peterson blames the non-existent SS trust fund for luring him into redistribution crime to commit serial acts of wealth concentration against innocent participants in SS.

The only cure for Peterson Plunder Perversion is to admit that one is a Recovering Wealth Concentration Addict and meet with the families of the victims to restore the missing remorse genes common in hard core criminals.
written by Chris Fabri , March 29, 2011 7:24
An overwhelming number of people support SS, but 50% don't think it will be around for them? There's a flaw in your logic here Dean. I think Social Security is in more trouble than it was in 2005. More influential people need to start talking honestly about this. I hope I'm wrong, but I'm starting to worry it won't actually be around for me, at least not in any useful way.
As Long as There Are Republicans, Social Security Will Be Under Attack
written by Paul, March 29, 2011 8:29
Republicans have continuously attacked Social Security for the past 75 years and no doubt they will attack it for the next 75 years. The Washington Post and its "reporters" like Klein are now nothing more than mouthpieces for the Republican party.

In the news business, Fox, the WSJ and other Murdock propaganda organs make money; the WaPo simply is trying to get in on that action now that its phony education arm, Kaplan, is taking a big hit.
written by joe, March 29, 2011 12:24
They say the "$2.6 trillion Social Security trust fund does not exist" and then they complain about the 14 trillion dollar national debt which includes the money owed to the trust fund. The reason the debt ceiling has to be raised is because money is owed to the social security trust. That debt is "real" enough to potentially shut down the govt. If it wasn't real, then national debt would only be debt held by the public.
written by Jeff Z, March 29, 2011 1:07
The debt ceiling has to be raised because of the combination of the trust fund and other debts of the U.S. government. You can not blame one for the need to raise the debt ceiling and ignore the other.

We seem to have no problem raising the debt ceiling to finance foreign wars of occupation, so it seems pretty clear to me that these debates are really thinly disguised class warfare. It thus seems pretty clear that this is a question of priorities.

I would personally like to thank Rupert Mur"dreck" for deliberately poisoning the stream of information through his minions at FOX and his lackeys at the Washington Post and NPR.
written by brent, March 29, 2011 3:29
why is $2.6 trillion owed to our self bad, but debt paid to banks in the cayman islands fine?
written by Don York, March 30, 2011 1:39
Like your article, thank you!
affordable women's watches
written by Calgacus, March 30, 2011 2:15
Peter Peterson knows every word he says is a lie. He was Nixon's Secretary of Commerce in 1971, and one of a handful at Camp David that advised Nixon to pull out of Bretton Woods and make the dollar a pure fiat currency.

The sensible thing to do with SS is of course - raise benefits, cut the tax. If it's short a trillion or two, put the dough in the Trust Fund if you want to have a national Teddy Bear / Security Blanket.
letter to the editor
written by George Fleming, April 04, 2011 2:30
Last month I sent the following email to the editor of a local paper:

"Subject: On one of Ten Suggestions (Moses)

Well, Joe, I guess you knew that it is legal, apparently, to spread the lie that Social Security is an entitlement ("Leadership Gap", editorial, 3/20/11):


If you didn't know that this is a lie, that would also be sufficient reason for you, at long last, to take up your true calling: shopping cart jockey at the Walmart.

yours truly,

George Fleming"

Joe replied:

"Dear Mr. Fleming,

Thanks for the e-mail. I always appreciate thoughtful readers. Best regards – Joe."

Write comment

(Only one link allowed per comment)

This content has been locked. You can no longer post any comments.


Support this blog, donate
Combined Federal Campaign #79613

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.