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Washington Post Should Lose the Adjectives When Describing Social Security Costs Print
Written by CEPR   
Tuesday, 15 November 2011 15:30
The Washington Post wants you to know that Republicans want to do something about those "soaring Social Security and Medicare costs" — except the Republicans didn't actually say that. If they had, it would have been a direct quote. But as Dean Baker points out over at Beat the Press, that's the Post's language. Do we really need to go over the difference between attribution and editorializing again?
 
Letter to Rep. Chaffetz: Social Security Has Dedicated Revenue Stream Print
Written by Dean Baker   
Monday, 14 November 2011 09:45

The Honorable Jason Chaffetz
1032 Longworth House Office Building
Washington, DC 20510

Dear Representative Chaffetz,

While announcing your new Social Security proposal, you said that “…while some argue that the Social Security trust fund will keep the program solvent, that trust fund is simply additional funding that the government must borrow and the government is spending more than it takes in.”

This is not an accurate statement. Under the law, Social Security is paid for by its own dedicated revenue stream: the Social Security payroll tax, the Social Security trust fund, and the interest generated by the trust fund. It only makes sense to talk about Social Security as being solvent or insolvent because it has this legally dedicated stream of revenue, which includes the bonds held by the trust fund. If Social Security is viewed as being just another government program like the defense budget or the education budget, then it would not even make sense to talk about it being insolvent.

The latest projections of the Congressional Budget Office show that the program will remain fully solvent through the year 2038. The program will continue to pay a substantial benefit – about 80 percent of the full benefit—from 2039 onward, even if no changes are made to the program.

Characterizing Social Security as a program on the brink of insolvency as a basis for reform is a misrepresentation of fact. As a Congressman, it is important that your public statements on this be as accurate as possible. If you would like any additional background on Social Security, I would be happy to assist you.

 
Letter to Romney: Social Security Does Not Need Saving Print
Written by Dean Baker   
Tuesday, 08 November 2011 15:30

Governor Mitt Romney
Mitt Romney for President
585 Commercial St
Boston, MA 02109

Dear Governor Romney,

At the Americans for Prosperity “Defending the Dream Summit” last week, you discussed the future of Social Security.  You began discussion of the program by saying:

 “I believe we can save Social Security with a few commonsense reforms. First, there will be no change for retirees or those near retirement. …Second, for the next generation of retirees, we should slowly raise the retirement age. And, finally, for the next generation of retirees, we should slow the growth in benefits for those with higher incomes.”

Actually, Social Security does not need saving. According to the Congressional Budget Office, Social Security will remain fully solvent through 2038, a full 17 years after the latest date you could possibly leave office if elected and re-elected president. From that point on, Social Security would still pay a substantial benefit – about 80 percent of full benefits from 2039 onward – even if Congress makes no changes whatsoever to the program. Because the scheduled benefit is projected to rise through time, even in this unlikely scenario where Congress never did anything to address a shortfall, retirees would always be able to get a higher benefit than what current beneficiaries receive.

You went on to propose raising the age of retirement for Social Security benefits because of increased longevity. I assume you know that there has been little increase in life expectancy for the bottom half of the wage distribution. And I assume you also know that almost half of all older workers have physically demanding jobs. These are two of the reasons that the vast majority of the public is opposed to raising the retirement age beyond the increase to 67 already scheduled under current law. Apparently you view the situation differently.

As a candidate for President of the United States, it may be worthwhile to consider the impact of these proposals on retirees. I hope that you will be careful to present the facts more carefully in the future. If you would like any additional background on the program, I would be happy to assist you.

 
Weisbrot to WaPo Ombudsman: Article on Social Security Contributed to Ignorance Over Trust Fund Print
Written by Mark Weisbrot   
Monday, 07 November 2011 11:30

CEPR Co-Director Mark Weisbrot sent the letter below on Nov. 5 to Washington Post Ombudsman Patrick B. Pexton regarding Pexton's defense of a story published on Oct. 29 that portrayed Social Security as "cash negative."

Dear Patrick,

In your defense of Lori Montgomery's article, you wrote that you "spent a couple of days last week talking to Social Security experts across the ideological spectrum."  I'm betting you didn't talk to any actual experts who have spent some time defending Social Security against the misleading claims that have been part of the almost daily assaults on the system for the past 20 years. 

If you had, you might have learned that the overwhelmingly most often repeated piece of verbal and accounting trickery used by right-wing opponents of Social Security is this one, from Montgomery's article:

"The $2.6 trillion Social Security trust fund will provide little relief. The government has borrowed every cent and now must raise taxes, cut spending or borrow more heavily from outside investors to keep benefit checks flowing."

Of course the fact that Social Security has loaned its surplus funds to the Treasury, instead of investing it somewhere else, is irrelevant to the program's finances.  But millions of Americans believe that the "trust fund provides no relief", and it is because of massive public ignorance — not the relatively small projected shortfall in Social Secuity's finances over the next 75 years, which will surely be taken care of long before 2036 — that the majority of the public thinks that they will not see their benefits.  The Post article contributed to that ignorance.

I don't know Lori Montgomery, but my guess is that she didn't write this kind of article — which contains a number of other misleading statements and inaccuracies that you did not address (see Dean Baker's post on Beat the Press ) — because she doesn't like Social Security or is trying to undermine it.  My guess, from talking to journalists for many years about this subject, is that she talked to people with a certain political agenda and got suckered.  Too bad for her, the Post, and the public.

Best,

Mark Weisbrot

 
Letter to Rep. Hensarling: Paying Social Security Benefits Does Not Mean We're Spending Money We Don't Have Print
Written by Dean Baker   
Monday, 07 November 2011 10:45

The Honorable Jeb Hensarling
129 Cannon House Office Building
Washington, DC  20515

Dear Representative Hensarling,

In an interview with Newsmax.TV you said that the problem with Social Security is its rate of growth, adding, “You cannot spend money you do not have. Otherwise you are borrowing from future generations.”

This is not an issue of spending money on Social Security that we do not have. Social Security is funded by a dedicated source of revenue, namely the Social Security payroll tax. As long as new workers continue to enter the workforce as projected, the program will continue to be funded.

You also mention the solvency of Social Security. There is relatively little cause for concern here, either. The recommendations of the Greenspan Commission in 1983 led to the growth of a large surplus in the Social Security trust fund that has since been used to buy U.S. government bonds. The government sold these bonds to the Social Security trust fund, just as it sells bonds to individuals and private corporations. Just as with any funds that come from the purchase of bonds, the money is borrowed by the government, but repaid at the end of the term of the bond. Along with payroll taxes, the proceeds from these bonds are used to pay Social Security benefits.

In fact, the projections of the Congressional Budget Office (CBO) show that Social Security will be fully solvent for the next 27 years (through 2038) and will continue to pay a substantial benefit from 2039 onward even if no changes are ever made. This means that when your 8- and 9-year-old children retire at the normal retirement age and assuming they have been as successful in their working lives as you have, they will receive benefits of $47,567 and $47,048 (in 2011 dollars) each year for the rest of their lives. According to CBO, the amount of revenue necessary to allow the program to pay full benefits over its 75-year planning horizon is less than one-tenth the size of the upward redistribution to the richest 1 percent over the last three decades.

As the Republican co-chair of the Congressional “super committee” on the deficit, it is vital that your statements about Social Security are accurate and factual. If you still are unsure on this issue, I would be happy to discuss the background further with you and your staff.
 
Letter to Sen. Isakson: Budget Problems Stem From Health Care Costs, Not Social Security Print
Written by Dean Baker   
Tuesday, 01 November 2011 15:40

The Honorable Johnny Isakson
131 Russell Senate Office Building
United States House of Representatives
Washington, DC 20515

Dear Senator Isakson:

During a recent talk at the Athens Country Club, you called for reform of entitlements saying, “…the real debt culprits are Medicare and Social Security.” You went on to predict that Social Security would begin to see benefit reductions as early as 2025.

In reality, neither of these statements is true. Social Security was created with a dedicated source of funding, Social Security payroll taxes, and because of this dedicated revenue stream, Social Security, by law, cannot contribute to the national deficit since it can only spend money taken in through this tax or from the bonds government purchased with surplus tax revenues in prior years.

Concerning future benefits, the legislation adopted based on the recommendations of the National Commission on Social Security Reform in 1983 led to the growth of a large surplus in Social Security. This surplus was used to buy bonds and now Social Security holds more than $2.6 trillion in government bonds. As a result, the Congressional Budget Office’s projections show that the program will maintain full solvency through the year 2038, a full 13 years beyond your prediction. After 2039, even if Congress makes no changes to the program whatsoever, Social Security will still be able to pay a substantial benefit. For example, if your children, now in their 30s, do as well as you have in your working years and retire at the normal retirement age, they would receive benefits of over $33,000 (in 2011 dollars) each year for the rest of their lives.

The real “culprit” that a serious plan would address is the soaring cost of healthcare. We pay twice as much per person for health care compared to other developed nations yet have no better outcomes and shorter life expectancies. If we were able to rein in health care costs then there would be little problem balancing the budget in future decades.

As you continue to discuss Social Security and the national debt, I hope you and your staff will have the opportunity to further review the design and finances of the program as well as the factors that actually contribute to national deficits. If you would like any additional background on these topics, I would be happy to assist you.
 
WaPo Confuses Front Page With Op-Ed Section, Angers Many Print
Written by CEPR   
Tuesday, 01 November 2011 11:00
In a "treacherous milestone" for journalism, the Washington Post published a front page story on Oct. 29 about Social Security that contained more falsehoods than fact. Dean Baker at Beat the Press summarized the problems with the story, and he wasn't the only one to take issue with it. The job of a newspaper is to break down difficult-to-understand issues for readers in a way that presents the many different sides without bias. While the article did include quotes from Social Security supporters such as Harry Reid, there were no quotes from officials or experts who could actually dispute the false premise the story was based on. Readers expect more from one of the top papers in the country, but lately being fair and balanced doesn't seem to be the Post's priority.
 
Letter to Gov. Perry: Bonds in Social Security Trust Fund Are Not IOUs Print
Written by Dean Baker   
Thursday, 27 October 2011 14:40

The Honorable Rick Perry
Office of the Governor
State Insurance Building
1100 San Jacinto
Austin, TX 78711

Dear Governor Perry,

The transcript of a speech touting your “cut, grow, and balance plan” features several statements that misrepresent the Social Security program. The most egregious example is your statement that “… the [Social Security] trust fund is full of IOUs, without a single dime of money left over from what workers have paid in. The politicians have borrowed against it for years. And in order to redeem the IOUs in the fund, they will have to either raise taxes or cut spending on other programs to replenish it.”

This is not an accurate statement. The recommendations of the Greenspan Commission in 1983, led to the growth of a large surplus in the Social Security trust fund that has since been used to buy U.S. bonds, widely considered to be among the world’s safest investments. The government sold these bonds to the Social Security trust fund, just as it sells bonds to individuals and private corporations every day of the week. Just as with any funds that come from the purchase of bonds, the money is borrowed by the government, but repaid at the end of the term of the bond. Saying that these bonds are IOUs is like saying the $100 savings bond for a newborn grand-daughter is just an IOU or the bonds currently trading at record-low rates are just IOUs. Saying that they are IOUs is a distortion of the facts.

While it is commendable that you recognize the role that Social Security plays in the lives of our seniors and in the retirement security of all Americans, I hope you and your staff will have the opportunity to further review the design and finances of the program as you prepare future public statements on the topic. If you would like any additional background on the program, I would be happy to assist you.

 
Letter to Rep. Ryan: Raising Cap on Social Security Payroll Contributions Could Close Funding Gap Print
Written by Dean Baker   
Tuesday, 25 October 2011 13:30

The Honorable Paul Ryan
1233 Longworth House Office Building
Washington DC, 20515-4901

Dear Rep. Ryan:

At a recent town hall in Racine, WI, a constituent asked you why people who earn millions of dollars pay the same in payroll taxes as the typical middle-class American. You replied that “… when you run the numbers … it gets you about six years of solvency in a 75-year problem, the problem is it doesn’t get you that much savings.”

In fact, raising the cap on Social Security payroll contributions just on those who make more than $250,000 would raise close to $7 trillion in revenue over the next 75 years, enough to close the Social Security funding gap while only raising taxes on 6 percent of working Americans. And even if Congress makes no changes at all to the program, the latest CBO projections show that Social Security will remain fully solvent through 2038 and would pay about 80 percent of full scheduled benefits from then on, indefinitely. It is quite difficult to make the case that a system that pays full benefits for the next 27 years is problematic or not working.

As the Chairman of the House Committee on the Budget you will almost certainly be deeply involved in any prospective changes to Social Security. I hope that you will take the time to better familiarize yourself with the program’s finances. I would be happy to assist in any way I can.
 
Mankiw Thinks We Should Cut the Social Safety Net Print
Written by CEPR   
Monday, 24 October 2011 16:00
Greg Mankiw, a professor of economics at Harvard and an adviser to Mitt Romney's presidential campaign, told New York Times readers over the weekend that "To maintain current levels of taxation, we will need to substantially reduce spending on the social safety net, including Social SecurityMedicare, Medicaid and the new health care program sometimes called Obamacare." Or, as Dean Baker suggests over at Beat the Press, you could fix what's actually broken: our private health care system.
 
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