Posted by Thomas Nephew on November 23rd, 2007
I noticed the graph on the right earlier this year when Ezra Klein lifted it from a Council on Budget and Policy Priorities.*
As the title indicates, yes, there’s a looming budget crunch — but as the dark blue area at the bottom of the graph indicates, no, it’s not because of Social Security. And no, there is no Social Security “crisis.” Period.
As Klein put it, “Look at that gentle slope for Social Security! You could do that in Rockports! Mt. Medicare and Medicaid, by contrast, require climbing gear.”
So what’s up with Social Security? The people in charge of keeping Social Security working are the Board of Trustees of the Old-Age, Survivors, and Disability Insurance. Their 2007 report, it’s true, now forecasts that the Social Security trust fund will be drawn down by 2042 — but as their own figure shows, even then there would continue to be an income stream from current workers that would pay out higher benefits to retirees than ones today receive. As Mark Weisbrot (Center for Economic and Policy Research) argues last week:
In fact, even if nothing were ever done to close the projected gap – and that is a wildly implausible scenario – Social Security would, after 2046 still have enough money to pay indefinitely a bigger benefit than it does today. That’s in real terms, adjusted for inflation. Of course, this benefit would be less than what seniors in the distant future would be entitled to, so we will eventually make some adjustments. But there’s no hurry.
What the OASDI report doesn’t tell you is that their estimates are based on pessimistic economic growth rates — and that even then, their estimate of when the fund will be drawn down has been receding into the future for the last ten years (although the 2042 estimate was the same in 2004 as it is now). And that even then, if a trust fund depletion looms, “the financing gap would be roughly equal to the amount by which we increased military spending between 1976 and 1986 (a period in which we were not, incidentally, at war),” as Weisbrot and his colleague Dean Baker pointed out in their 1999 book “Social Security: The Phony Crisis.”
Now, we’ve got 78 million baby boomers that are going to be retiring, and every expert that looks at this problem says “There’s going to be a gap, and we’re going to have more money going out than we have coming in unless we make some adjustments now.” Now, I think that Social Security is the single most important social program that we have in this country, and I want to make sure that it’s there not just for this generation, but for next generations.
Last week the New York Times’ Paul Krugman offered a charitable interpretation, I think, in his “Played for a Sucker” column:
Mr. Obama’s Social Security mistake was, in fact, exactly what you’d expect from a candidate who promises to transcend partisanship in an age when that’s neither possible nor desirable.
…Social Security isn’t a big problem that demands a solution; it’s a small problem, way down the list of major issues facing America, that has nonetheless become an obsession of Beltway insiders. And on Social Security, as on many other issues, what Washington means by bipartisanship is mainly that everyone should come together to give conservatives what they want.
Likewise, for all that she’s not my favorite candidate either, Hillary Clinton is right on the money about this (emphases added):
I’ve said, these are Republican talking points. Social Security is not in crisis. Health care’s in crisis. Medicare’s in crisis. The energy—climate change is a crisis. And I’m not going to be repeating Republican talking points…
Why are Democrats having this debate? Democrats should be rejecting the premise of this debate. That’s what we successfully did when we took Bush on with privatization. We said, “It’s not in crisis. We’re not going to play this game. You’re trying to undermine and destroy Social Security.”
So I feel very comfortable with where I am. And for the life of me I don’t understand what my opponents are trying to achieve. There are a couple of folks who might give them an atta-boy, but when it comes down to it, let’s focus on health care, Medicare, energy and all these other issues…
Someday, tweaks may be needed for Social Security. But when Barack Obama tries to distinguish himself by crying wolf right now about the program, he’s working for the wrong people, and he’s undermining one of the only victories the Democrats have been able to pull off in the last several years — stopping Bush’s efforts to privatize Social Security.
I’m reading Naomi Klein’s “Shock Doctrine” right now, and she paints a convincing picture of the past 30 years of “frontier capitalism” — a capitalism that makes its own frontiers by wrecking one country after the other and then buying up public assets for a song.
Social Security is one of the biggest, fattest targets for this century’s robber baron class, both because of all the money in it, and because it sticks in their craw the way Jimmy Stewart’s savings and loan stuck in Potter’s craw in “It’s a Wonderful Life.”
So if what Obama means by “audacity of hope” is crying wolf about Social Security, we need a good deal less of that, please. And if transcending politics means playing into the hands of his party’s opponents, we don’t need any more of that, either.
* “THE LONG-TERM FISCAL OUTLOOK IS BLEAK: Restoring Fiscal Sustainability Will Require Major Changes to Programs, Revenues, and the Nation’s Health Care System,” by Richard Kogan, Matt Fiedler, Aviva Aron-Dine, and James Horney. — full report, 27 page .PDF file.
NOTES: “receding into the future” — Economic Policy Institute; Clinton quote via Jonathan Schwarz (“A Tiny Revolution”), where you can also listen to her; “transcending politics” — Andrew Sullivan’s Atlantic Monthly article “Goodbye To All That.”