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Home Publications Blogs Beat the Press Is Declining Faith in Social Security Due to the Recession or Peter Peterson?

Is Declining Faith in Social Security Due to the Recession or Peter Peterson?

Tuesday, 20 July 2010 06:07

USA Today notes a decline in the percentage of people who expect to receive their Social Security benefits. The first sentence of the piece implies that the loss of confidence is due to that fact people have been: "battered by high unemployment and record home foreclosures."

While the recession could explain the loss of confidence in Social Security, it is also possible that the huge public relations campaign by Peter Peterson and others has played a role. Peterson, a Wall Street investment banker, has pledged $1 billion to a foundation that has cutting Social Security and Medicare as its major goals. He has spoken widely around the country telling people that Social Security is going broke and that it has no trust fund. He has enlisted prominent political figures, including former President Bill Clinton in this effort.

There are other efforts to undermine public confidence in Social Security, most notably President Obama's deficit commission. Former Wyoming Senator Alan Simpson, one of the co-chairs of this commission, has also frequently insisted that Social Security is going broke.

It is possible that these public relations efforts have had their intended effect of undermining confidence in the Social Security. The article should have at least noted this possibility.


Comments (12)Add Comment
written by izzatzo, July 20, 2010 8:04
Cutting Social Security to fund National Security programs has become a no-brainer. According to the new investigative report by the Washington Post, since 9-11:

... 1,271 government organizations and 1,931 private companies work on programs related to counterterrorism, homeland security and intelligence in about 10,000 locations across the United States

where these organizations are staffed by 854,000 people across the country with top-secret security clearance.

Spending on National Security long ago exhibited negative net benefits at the margin due to gross incompetence, fraud and turf wars, resulting in less security for each dollar spent. However, the 854,000 strong National Security staff also know Social Security is now even a greater threat to National Security than National Security itself, but can't tell the others because it's top secret, so they've sacrificed themselves into stoic patriotic silence as they carry on with under funded staff and other resources.

If you can't support their heroic spokesperson Pete Peterson with a donation, at least agree to have a hefty automatic deduction from your SS benefits sent to support these brave 854,000 individuals, who can't speak out on behalf of themselves and their families. Save National Security now, because if you don't Social Security won't matter.
written by jammu, July 20, 2010 9:04
It's deja vu all over again: having been released into the workforce in 1981 all these wailings and rending of garments about Social Security have a familiar ring.

Part of it is the recession. In many respects the economy now is worse than the early 80s and it took years to get people to feel a little better about their prospects (but remember people in the rust belt never did pull out of it). So my vote is it's the recession. Who gives a flying $%#@ about some a$$hole with a billion dollars to flush down the toilet.
Ah shucks mam
written by Scott ffolliott, July 20, 2010 9:12
Says Alan Simpson: “Ah shucks mam, I’m just a simple guy from the little state of Wyoming “

Substitute: Bill Clinton, Arkansas

Same old hucksters shuffling the cards for Three Card Monty.

As in every shell game, the hand is always quicker than the eye
written by Tyrone, July 20, 2010 1:33
And the world has yet another reason for laughing at America and saying, "There they go again, proving they have more money than brains".
To USAT's credit
written by Mike, July 20, 2010 2:29
They did mention further down that people are confused about the prospects of SS funding over time. But USAT failed to connect the dots and explain why people were confused, or whether the media had a role in that problem or the solution.
written by RueTheDay, July 20, 2010 2:53
The actual FACTS about Social Security are quite simple.

At the peak of baby boomer retirement, inflows (from FICA taxes) will cover approx 75% of outflows (benefit checks). Thus the shortfall that must be made up is about 25%. If people want to worry about something, I'm not sure why they're worrying that "there won't be anything left in SS for me" as opposed to "how do we make up the shortfall".

The answer is pretty straightforward. Some combination of: raise the retirement age by a year or two, change the way COLAs are indexed (e.g., from CPI-w to CPI-u), raise the ceiling on wages subject to FICA taxation by $10k or so. That would essentially fix the problem forever, and we could even eventually cut the tax and increase the benefit once we got over the baby boomer demographic hump.

I find it shocking that the Chicken Little alarmists don't get called out more frequently.
written by Capital Munch, July 20, 2010 3:28
It doesn't help that each American's Annual Social Security Statement contains some (intentionally) scary language. For example, on the cover page it states "the Social Security system is facing serious financial problems, and action is needed soon to make sure the system will be sound when today's young workers are ready for retirement." It goes on: "In 2017 we will begin paying more in benefits than we collect in taxes. Without changes, by 2041 the Social Security Trust Fund will be exhausted and there will be enough money to pay only about 78 cents for each dollar of scheduled benefits." On page 2, right by where it tells you what your monthly benefit will be, it says in bold: "The law governing benefit amounts may change because, by 2041, the payroll taxes will be enough to pay only about 78 percent of scheduled benefits." When SS is in your face like this every year, people can't help but be scared.
written by vorpal, July 20, 2010 4:20
Capital Munch is correct. I wanted to comment on this myself.

It was supremely offensive. Every single Senator and representative should be fired for this.

America crapping on itself. Unforgivable.
written by Queen of Sheba, July 20, 2010 4:49
The reason fewer people expect to receive their SS benefits is because they've been told to expect less from SS security in the future - if anything at all. Some of them blame the Republicans for this assault on SS and some of them blame Obama. But everyone will lay blame somewhere, because everyone wants to be able to collect benefits when the time comes for them to do so.

I've decided that Obama feels like SS reform will be his "Nixon to China" moment in history. I think it will guarantee his administration lives in infamy.
Pernicious Demagogue
written by Union Member, July 20, 2010 8:55

Peter Peterson is the most pernicious demagogue this country has ever seen - and he should be treated as such: he should be welcomed nowhere and confronted everywhere.

Social Security is the most important democratic Institution our Republic has: it is money for The People and it is funded by The People.

Nothing could be simpler and clearer than that. It is also probably the only democratic institution we have left. Congress is bought and paid for by corporations and oligarchs; the Supreme Court treats the Fourteenth Amendment like it is a Bill of Rights for corporations; Dick Cheney-in retirement - has more influence than Obama; nothing can be said that could capture how out of bounds our military is right now, and that looks like it is irreversible too -- and the press?

The issue of SS is more than just retirement money. What are Petersons motives? What is the end game? It's a zero sum end game, where the last vestige of political power still held by The People in Social Security is taken away from them by greedy power grabbing liars who don't even pay into it!
Merely a distraction
written by Richard, July 20, 2010 11:41
Petie is just trying to distract the American people, so we don't start talking about taxing the billionaire hedge funds that have plundered all of our pension funds,401k's, and IRA's, etc. The worst that can happen is that we will have to be wage slaves until we die. In the mean time the depredation continues unabated.

This conversation always comes to the surface as a precursor to a new war. I suppose it will be Iran next.

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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.