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Home Publications Blogs Beat the Press Martha Raddatz on Social Security: What Would You Do About the United States' Imperialistic Foreign Policy?

Martha Raddatz on Social Security: What Would You Do About the United States' Imperialistic Foreign Policy?

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Friday, 12 October 2012 04:12

During the vice-presidential debate Martha Raddatz used her position as debate moderator to ask the candidates about the impending bankruptcies of Social Security and Medicare. It was incredibly irresponsible to use such a loaded term to refer to the financial problems facing these programs.

Both Social Security and Medicare are projected to face shortfalls over their 75-year planning horizon, however these shortfalls are not accurately described as "bankruptcy." This phrase undoubtedly leads many people to believe that there is a prospect that the programs would go out of business.

Polls consistently show that a majority of young people believe that they stand to get nothing back from Social Security when they retire. That is of course not true unless Congress were to vote to eliminate the program. Under the latest projections they would stand to get a larger benefit than current retirees even if nothing is ever done to change the program's finances. It is unlikely that listeners would understand this to be the case based on Raddatz's comment.

It is also unlikely that viewers would have realized that the changes put in place by the Affordable Care Act extended the date when Medicare is first projected to face a shortfall from 2016 to 2024 and reduced the projected shortfall over the program's 75-year planning period by more than two thirds. The remaining gap could be filled by a tax increase that is less than 2 percent of projected wage growth over the next 30 years.

It is the job of the moderator to try to provide their audience with information and to draw out the candidates' views. It is incredibly irresponsible to use this platform to push their personal agenda for the country's two most important social programs.

Comments (15)Add Comment
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written by Last Mover, October 12, 2012 7:58
Now I would like to turn to the impending hospitalization of your wives given that both of you have stopped beating them for the duration of the campaign.

First question. Was this a pre-existing condition?
Hysteria
written by David, October 12, 2012 10:10
Raddatz is yet one more "journalist" who seems to thrive on the power they have to incite gossip and hysteria and to market bogus ideas pushed by Pete Peterson and the like. They don't honor the facts, because there is no consequence for failing to do so.
wife beaters
written by coberly, October 12, 2012 11:04
But Joe Biden had the chance to point out that SS was not going bankrupt.

It is understandable that what passes for a journalist today would take the conventional wisdom as "the truth"... after all she helps create it.

But the fact that the Democratic President and Vice-President don't know it's a lie, or know but find it useful for their purposes is the real tragedy.

it might force them to confront the truth if credible people kept pointing out that SS can continue forever with no cuts in replacement rate or increases in retirement age simply by raising the tax one tenth of one percent each year to pay for the projected shortfall largely caused by the expected longer life of the people paying the tax.

social security was always meant to be "worker paid." it is insane to start screaming its going bankrupt because the cost will go up a tiny bit. it's like projecting that the cost of bread will rise by pennies per year and deciding to stop growing wheat in order to avoid the huge projected debt that is projected by people not paying for the bread they eat for the next 75 years..

nor does it help for the defenders of Social Security to keep saying the "answer" to the "shortfall" is to force "rich people" to pay for everyone's bread.

the rich won't do it. and this is what they mean when they talk about people thinking of themselves as victims unwilling to take responsibility for their lives.

the workers are willing to take responsibility. social Security gives them a way to do that... by protecting their savings, not by putting them on the dole.

the "left" is so committed to a welfare model they can't understand what Social Security actually is... the best anti poverty program in America... because the workers pay for it themselves.
But Joe Biden had the chance to point out that SS was not going bankrupt.
written by AlanInAZ, October 12, 2012 11:13
Biden did point out that the medicare shortfall was extended to 2024. On social security he chose to hammer the point about republican support of a privatized system. A political debate is about the worst place to discuss complex economic policy issues. Both sides are looking to land rhetorical zingers that stick in the voters minds.
I don't get the headline
written by Brett, October 12, 2012 11:18
It would have actually been nice if she asked "What would you do about the United States imperialistic foreign policy" -- I wouldn't consider that a loaded question. It's a fact, whether DC pundits are willing to admit it or not, that the US is running an empire with over 1000 military bases located all over the world. We're the only country in the world that has divided the globe into 6 different spheres of which we have assigned generals to oversee(see http://en.wikipedia.org/wiki/U...nt_Command). This is why we spent $700-$800B a year on the military (probably closer to $1T when you factor in hidden items like Department of Energy spending on nukes, interest on the debt, etc.), far dwarfing the next highest (China) at $200B or so.

So asking about empire would be refreshing honesty from a DC pundit. Her comments on Social Security going bankrupt, however, were typical erroneous conventional wisdom.
Alan in AZ
written by coberly, October 12, 2012 11:47
But it's not a "complex economic issue." It is the CORE LIE of the whole Social Security "debate."

It is a mere "technical point" that it's not going "bankrupt," but will merely "run out of money in twenty years." I understand that it won't run out of money, but the people don't see any difference between "broke" and "can't pay for my retirement."

there should not even be a "medicare shortfall," if the program was funded by a, say, 2% increase in the payroll tax. what we are seeing here is the rich who don't want to pay for everyone's health care, and the "left" who don't think the poor workers should have to pay for their own.

the time may come when the workers are so poor they need the help of the rich. but we are not at that point yet. and going to "worker paid" will help make the "costs of medical care" clearly the problem, and not some idiot scheme to "save medicare" by cutting it to where it won't provide meaningful insurance.

i have to run. be back this evening if you want to disagree with me more.
"peace of mind"
written by AlanInAZ, October 12, 2012 12:21
Coberly,

I am now 66 and I can remember 40 years ago that Republicans were saying the same things about Social Security going broke. I believe politically, the best thing to emphasize is that SS will not become an investment vehicle subject to market swings. To my mind more people are worried about this than anything else. I admit this is a subjective assessment. Biden mentioned "peace of mind" so I think he thinks so as well.
...
written by Jay, October 12, 2012 6:46
I don't know why Biden didn't address the Social Security myth. He didn't address lowering the dollar to increase trade, promoting policy to strengthen workers' rights, or increasing the amount leave for job sharing or so people can express those family values that the Republican party likes to pay lip service to while working people to the bone with less pay, job security, and benefits.
alan in AZ
written by coberly, October 12, 2012 8:47
hope you're right, but i have no peace of mind when the President is offering to cut SS.

if they cut it, your childrend will be forced to depend on the market for "enough" to retire. if your chidren raised their own payroll tax eighty cents per week peryear, SS would be enough to retire "if all else fails." which is what it is for.
...
written by Bart, October 12, 2012 9:43

That was quite a coup by Raddatz: Telling 50 million Americans that Social Security was bankrupt. The Peterson people must have wet their collective pants.
Options for saving SS
written by Bill Turner, October 13, 2012 2:47
Alan in AZ has made some good points. However, I would like to know from where he gets his figures.

Also, I would like to know he thinks raising the tax is the right solution when there are other options.

1) The cap on SS taxable income could be raised. Why not double the cap, triple it or remove it altogether? The Republicans have often touted the idea of a "flat taxes", and they have recently made an issue of "having everyone pay, everyone invested", meaning that those that currently don't pay federal income taxes should do so. So, why isn't this the same? Why shouldn't all income be subjected to SS taxes? Doing so would likely mean the rate could be lower. Doing so, though, would mean the formula for calculating retirement benefits be changed. Benefits are calculated based upon the amount of your SS earnings. Traditionally, the SS earnings cap was 90% of the wage earnings. When that ceased to be the case. Perhaps it was when the earning of those at the top started growing dramatically disproportionately to those lower in the socio-economic order.

2) The tax could be broadened to include capital gains. Why should only labor be taxed? To be fair, Alan has made something of an argument for why this shouldn't be. I don't agree with that position. Economic production equals capital plus labor plus raw material (including land). Capital and labor can work as substitutes for one another in many situations, but all are necessary. So, since labor is a critical component allowing capital to enjoy the profits of production, it seems capital should also contribute to the well-being of labor. Income from wage labor seems an insufficient source of revenue for a social contract, especially when you consider that capital will see return on the labor's efforts long after labor is no longer employed.
...
written by AlanInAZ, October 13, 2012 5:48
Bill,

I think you your comments relate to the posts by Coberly. I made comments relative to political strategy. My opinion on finances for SS and Medicare is that the wage ceiling should be raised with some minor tax increase if needed. Retirement age should not be extended. I don't think cap gains and dividends should be included as I think this would be a disincentive to save.
...
written by Bob Ross, October 14, 2012 3:55
Just to clarify: Is this the section of the debate you're referring to? If so, its Rep. Ryan who actually uses the term bankruptcy, while Ms Raddatz uses a slightly less loaded
phrasing, i.e.. "going broke" "Facing a shortfall" would of course have been a fairer and more accurate description.

MS. RADDATZ: Let's talk about Medicare and entitlements.

Both Medicare and Social Security are going broke and taking a larger share of the budget in the process. Will benefits for Americans under these programs have to change for the programs to survive, Mr. Ryan?

REP. RYAN: Absolutely. Medicare and Social Security are going bankrupt. These are indisputable facts.
Peter Diamond points out how Ryan would raise SS taxes on under 110K only
written by AndrewDover, October 14, 2012 8:44

"What fascinated me when I looked recently at Ryan’s 2010 plan, which I’d never done before, is that he wants to raise payroll taxes. But he does not increase the maximum subject to the payroll tax. And he doesn’t change the payroll tax rate. What he does is change the base that the payroll tax affects by including what’s now excluded from the payroll tax relating to health insurance benefits. It’s both what your employer spends for you and what’s currently not taxable when you spend it yourself through your employer. So he’s increasing the tax base, and he’s increasing revenues by a significant amount. 1.13 percent of payroll’s worth of increased revenues over 75 years.

But the tax increase only applies up to the Social Security cap. So if you’re earning less than $110,000 and get your health insurance through your employer, your payroll tax payment goes up. If you earn more than $110,000, your payroll tax doesn’t go up. So this is a tax increase only for the bottom 94 percent, not the top six percent."

http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/10/14/weekend-interview-peter-diamond-on-social-security-privatization-proposals-and-the-grand-bargain-hed-like-to-see/
Moderator "framed" the topic
written by George Fulmore, October 15, 2012 1:57
The moderator "framed" the topic of entitlements by saying that they were going "bankrupt," which, of course, they are not. Social Security has about $2.7 trillion in its Trust Fund, and it makes $100-200 billion in billion payments on that balance per year. That is added to the income from the payroll tax to make the annual beneficiary payments solvent. Medicare has incoming revenue, but it costs the federal government about $350 billion per year. But what a program. Before Medicare, about 50% of all seniors where without health care insurance. Can you imagine being a senior today in that position? And what about Mitt Romney? He never mentions Medicare, even though he is 65 years of age. He probable could care less about its benefits. He is sooooooo rich, he could care about what it offers. He has no business trying to be President of the U.S..

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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.

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