Following big Republican gains in the midterm elections earlier this month and with President Barack Obama’s deficit commission unveiling its new proposals last week, everyone seems in agreement that a big part of the solution has to be Social Security cuts.
But nothing could be more devastating to our present and future prosperity than to weaken this national treasure. While well-intended, the structure and timing of this commission looks like it could be a high-powered version of a longtime Republican parlor game: whack Social Security.
Just as many on the right used the health-care reform debate to attack Medicare, the same thing is now happening to Social Security.
But putting aside the political folly of making this longtime Democratic program a piñata, the facts and recent polling suggest that, instead of backing away from this signature accomplishment, it is time to double-down. Social Security needs to provide the same bedrock of stability and security for the 21st century as it did for the previous century.
Any discussion about Social Security should follow three basic rules.
First, let’s not forget the primary lesson from the health-care debate: Do not bargain against yourself.
We spent a year looking for bipartisan approaches. That did not work. At every step, one side stood for reduced costs and better care while the other spun exaggerations — even fabrications — instead of real proposals.
Social Security is the same. We should not assume the program is on the brink of collapse just because Republicans say it is. We should not begin a discussion about the issue from their faulty premises. We must work from the facts and our principles.
We already know where the American people stand. A recent poll found that 77 percent of voters say cutting the growth in Social Security spending should not be the focus of how government approaches deficits.
Second, do not believe the hype. Most doomsayers who point to declining Social Security revenues intentionally ignore some basic facts. They ignore that Social Security is fiscally responsible. By law, it cannot spend money that it doesn’t have. And the Social Security Trust Fund now has a $2.5 trillion surplus that can help pay out benefits for years to come.
Without any change, Social Security could cover three-quarters of benefits until 2083 — when people born today will be 73.
Short-term projections of Social Security are also inherently flawed. That is because Social Security is funded through a payroll tax. It brings less money in during recessions — particularly one as pronounced as this current economic crisis.
Once the economy begins to recover and people get back to work, revenues are sure to rebound. Then we can put money back into the trust fund surplus — ensuring that Social Security will be there for generations to come.
Concerns that the baby boomer generation would push us off a demographic cliff have also been overstated. It is true that when the baby boomers retire, each Social Security beneficiary will be supported by fewer workers than the previous generation.
But this does not mean the system will go bankrupt. There will still be more than one worker to each beneficiary and projected earnings are expected to be far higher in the decades to come.
We will not be in a recession forever. A recovering economy, combined with long-term increases in productivity, will correct the short-term revenue imbalance that some critics use to paint a distorted picture of Social Security.
We can also help improve the system once we pass sensible immigration reform. Immigrants who pay taxes contribute to Social Security, as do their working-age children. Both the Social Security chief actuary and the Congressional Budget Office predict that immigration could improve Social Security’s financial picture over the long term.
Third, we should take a hard look at minor tweaks to preserve the system. Though Social Security’s long-term health is not the concern that critics say, this does not mean we should shy away from considering small, common-sense improvements. We can make modest changes that will strengthen and protect the system for years to come.
We can also consider tapping other sources of income, like capital gains and real estate. What we should not do is take rash action to dismantle a wildly successful program. Since 1937, Social Security has paid out more than $15 trillion to retirees, people with disabilities and survivors of deceased workers. More than 50 million Americans now depend on the program for basic financial stability and security.
The real crisis is not Social Security but retirement security. Pensions and household assets lost $7.4 trillion between the stock market’s softening in October 2007 and its nadir in October 2008. Both traditional pensions and defined contribution plans like 401(k)s shed nearly half their value during that time.
That is why American retirees need Social Security now more than ever to ensure a stable source of retirement income.
The future of America requires us to bring budgets into line and focus on creating an economy that puts people to work. The old game of whack Social Security will not achieve any of those goals. At a time when middle-class Americans are struggling, we should protect and strengthen this vital lifeline.
©2010 Community News Group
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