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Home Publications Blogs Beat the Press The Washington Post, Which Is Projected to Go Bankrupt In Coming Years, Misreports Social Security

The Washington Post, Which Is Projected to Go Bankrupt In Coming Years, Misreports Social Security

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Friday, 20 August 2010 05:30

The Washington Post, which is losing subscribers at the rate of 10 percent a year, felt the need to tell readers in a front page story that many people at a congressional campaign event: "recognized the need to fix Social Security, which is on track to go bankrupt in the coming decades without changes." Actually, the projections show that if no changes are ever made to the program it will only be able to pay 78 percent of scheduled benefits 27 years from now. The program would not go bankrupt.

As a political reality, it is close to absurd to imagine that at a time when beneficiaries are almost 50 percent larger as a share of the voting population that Social Security would be allowed to substantially reduce benefits. Congress has in the past responded quickly to shortfalls in the program and it would almost certainly take steps to ensure that close to full benefits are paid, even if nothing is done over the next 27 years and the projections prove accurate.

It also would have been useful to point out that the discussion of Social Security privatization is largely a diversion of the real issue concerning Social Security. The co-chairs of President Obama's deficit commission have both publicly suggested that they would support cuts to Social Security, such as an increase in the retirement age. Such cuts are the most immediate issue affecting the program, not privatization.

Comments (10)Add Comment
Here's my "answer" to the problem
written by Bill, August 20, 2010 8:22
First - do nothing.
Second - pass a law that says that when the Trust Fund is projected to run out in 7 years, that the potential solutions be put to a vote (by Congress? by the whole population?). And that the vote will include these options:
1. Pay the % of benefits that tax collections will support (that is, say, 78% if current projections are correct).

2. Increase taxes enough to keep the benefits unchanged.

3. Increase the retirement age.

But the most important thing is that the solution is to wait until the Trust Fund only has 7 years left before voting on anything.
Misanthropic Journalism
written by union member, August 20, 2010 8:46


Journalism intent
on
Directing harm toward the most vulnerable.

There is an old adage that journalism's purpose is to comfort the afflicted and afflict the comfortable.

The Post comforts the comfort
able and
the powerful and afflicts the innocent and the weak.
...
written by izzatzo, August 20, 2010 8:47
In a study of news on SS and its public perception from mainstream media, experimenters presented two contrasting views of SS to subjects, one that's it going bankrupt, the other that it's solvent, then showed subjects pictures of people hitting themselves in the head with a hammer.

Brain scans showed that subjects who believed SS was going bankrupt also lit up pleasure centers in the brain when viewing pictures of people hitting themselves in the head with a hammer.

When interviewed afterward for the reason, they explained that bankrupting SS was like hitting yourself in the head with a hammer because it feels so good to stop. They want SS to be bankrupt because the solutions for fixing it are so good, it feels better to fix something that's not broke than something that is.
Why wait?
written by AndrewDover, August 20, 2010 8:47
Just wondering WHY Bill wants to run the social security system with a actuarial deficit for another 20 years? That's a great solution for the 70 year olds, but lousy for the 45 year olds.
thou doth protest too much
written by scott, August 20, 2010 9:35
you overstate your case, then acknowledge that changes must occur. Without changes demand will exceed supply, SS will be unable to cover it's expenses. That IS a definition of Bankrupt.

I agree that they overstate their case, but your doing the same doesn't make you more right. I appreciate your voice on this, there IS a campaign to discredit SS. I would hope you'd abstain from using the very tactics you decry.

Turnabout IS fair play, but you should write, "It's far more complicated than that; one could just as rightly say..."
...
written by skeptonomist, August 20, 2010 10:33
According to the census, currently about 63% of the population is working age (17-64) and about 13% is retirement age (65+). If the current rate of population growth remains constant (it has been roughly so for many years), then the percentages will stabilize around 2035 at 57% working age and 20% retirement age.

As Dean says, the percentage of retirees will be about 50% higher in 40 years, but they will still be outvoted by working people - it is the latter who will decide on the levels of taxation and SS compensation, and of course everything will be influenced by economic growth and inequality between now and then.

But currently boomers are in the working population and it is certainly not in the interest of most of them to increase payroll taxation or the retirement age. If the surplus in the Trust Fund is not paid out by the time they have all died they will have been cheated. And if SS assets are used to reduce the deficit by cuts or other action, working people (those whose income is wages and salaries under the SS limit) will have been cheated by those upper-income people who have benefitted by the tax cuts of the last 30 years.
Exactly. Bravo!
written by Scott ffolliott, August 20, 2010 12:00
The Washington Post, Which Is Projected to Go Bankrupt In Coming Years, Misreports Social Security"

Well said, well put!
There's a trick in there
written by NoMan, August 20, 2010 12:45
"As Dean says, the percentage of retirees will be about 50% higher in 40 years, but they will still be outvoted by working people - it is the latter who will decide on the levels of taxation and SS compensation, and of course everything will be influenced by economic growth and inequality between now and then."

That's only partially true. A bigger problem is that the younger segments of the population do not vote, and the older segments of the population overwhelmingly vote. By the governments count, people aged 18 - 35 only vote half the time, while people in the 65 - infinite range vote about 70% of the time, giving them a 20% vote advantage regardless of population.

Additionally, a single issue like this is what they go to vote for.

However, something needs to be done to insure that it stays stable over time, rather than waiting for the payments to go down. Tie the inflation to wage inflation rather than price inflation (Consumer Price Index at the moment), and increase the age at which benefits start. If we had a better health care system, neither of those two measures would be necessary, but we all see how well that went.

Both those measures make far more sense than trying to privatize social security, which isn't going to happen.
...
written by Queen of Sheba, August 22, 2010 12:46
Currently Obama's deficit commission is mulling over a proposal that is sure to incite a generational war. The proposal is to raise the retirement age to 70 for those currently aged 55 or under. Of course this is a way to cut these future retirees' benefits by about 19% as opposed to the 25% in the current projections - just figured in a different way, based on the number of years those future retirees would be able to collect benefits rather than the amount of benefits they would collect each month.

In implementing such a war plan it would first be necessary to convince those under 55 of two things: first, that the Boomers are greedy and selfish, demanding that THEIR benefits won't be cut and second, if something is not done there will be no benefits for anyone, as there is no trust fund - just a bunch of IOU's - and the program will be bankrupt. This stage-setting is already underway. Most of the younger people I talk to don't think Social Security will be there for them when they retire.

So the younger generations will either demand the Boomers relent and give up some of their future benefits or pay increased taxes so the trust fund can be made solvent (and the Boomers will refuse, saying they already did that back in the '80s), or the younger generation will accept the fait accompli and agree to lowered future benefits (and possibly even partial privatization), but will resent the Boomers for the rest of their lives for "destroying" the program before the younger generations' time came to retire.

Either way, it's a divide and conquer strategy, and if the "small" people in this country are not vigilant and politically aggressive enough to stop it, the strategy will work.
andrew dover asks "why run the SS system with an actuarial deficit"?
written by hb, August 24, 2010 11:58
because that was what was planned back in 1983 when st. reagan "fixed" SS -- boomers pay in extra for 30 years, extra money borrowed into the general budget, general budget pays them back when they start to retire.

now that it's time to repay, the usual suspects are saying this "actuarial deficit" is some kind of negative.

it's not. it's just that CAPITAL, which got 30 years of tax cuts to fund speculation with, doesn't want to repay.

and any other "fix" = robbery of the poor & middle by the super-rich.


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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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