Selling Social Security

By Dean Baker, In These Times. Posted December 13, 2004.

Nov. 2 was just the beginning of the bad news. Two days after the election, before most of us had even recovered, President Bush told the country that he would use his “political capital” to privatize Social Security.

This declaration of war was smart strategy. Social Security is by far the country’s most important and successful social program. Over the last seven decades it has provided a decent retirement to tens of millions of workers and their spouses. It also provides disability and survivor insurance to almost the entire working population – nearly two million children are currently receiving survivors’ benefits. For these reasons, Social Security enjoys enormous public support, regularly getting approval ratings of close to 90 percent in public opinion surveys.

If Bush is going to privatize Social Security, he must move hard and fast – as he has. And if we are going to save it, progressive forces will have to mobilize quickly.

Fact vs. Fear

The key to stopping this drive for privatization will be to educate the public about the basic facts on Social Security. For two decades, the right has been working overtime to undermine confidence in the program. Groups like the Concord Coalition have been telling the country that Social Security is a Ponzi scheme that will inevitably collapse once the baby boomers retire.

The fearmongers have been largely successful. Many workers, especially those under 40, are convinced that Social Security will be bankrupt before they see a dime in benefits. For these people, the promise of a private account sounds pretty good, since they don’t believe they will ever get anything from Social Security anyhow.

Progressives must use every means available to tell people that they have been lied to about Social Security. The program is unambiguously healthy. The Social Security trustees’ report (available on the Social Security Administration’s Web site) shows that the program can pay every penny of benefits through the year 2042, with no changes whatsoever.

Even after 2042, the trustees’ projections show that while the program won’t have enough to pay currently scheduled benefits – which are approximately 40 percent higher than current benefits – it will still have enough money to pay benefits higher than those that current retirees receive, even when indexed for inflation. The changes necessary to allow full scheduled benefits to be paid throughout Social Security’s 75-year planning period are smaller than the changes to Social Security – increased Social Security taxes and benefit cuts – that were made in each of the decades from the 1950s through the ’80s.

Last June, the nonpartisan Congressional Budget Office (CBO) made an independent assessment of Social Security’s finances and concluded that the program could pay all benefits even longer – until 2052 – with no changes whatsoever. According to the CBO, the changes needed to keep the program fully funded through its 75-year planning period are less than half as large as the Social Security tax increases put in place in the 1980s.

Just to be clear, neither of these projections is based on a rosy scenario about the future. In fact, the Social Security trustees assume that over the next 75 years the economy will experience the slowest pace of productivity growth in its history – there’s no “new economy” in this story.

In short, the claims that Social Security is in imminent danger of bankruptcy are just like the claims about Saddam Hussein’s weapons of mass destruction – politically motivated lies.

One such claim that gets frequently repeated is that the Social Security trust fund has been “raided,” “spent,” or is just worthless pieces of paper. In fact, the Social Security trust fund holds almost $2 trillion of government bonds. Under the law, the government must repay these bonds to Social Security from general revenue – this means it will be repaid primarily from progressive personal and corporate income taxes, because workers have already paid for their Social Security benefits. In other words, the government is obligated to tax wealthy people like Donald Trump and Peter Peterson (the founder of the Concord Coalition) to pay for the Social Security benefits that the rest of us have already earned.

Dean Baker is co-director of the Center for Economic and Policy Research.

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