Think Progress

by Faiz Shakir, Benjamin Armbruster, Zaid Jilani, Alex Seitz-Wald, Tanya Somanader, Pat Garofalo, and George Zornick

Social Security Under Assault

This year marks the 75th anniversary of the Social Security Act, and despite its standing as arguably the most successful social program in the country's history, Social Security has come under assault from a variety of Republican lawmakers and candidates. In his "Roadmap for America's Future," Rep. Paul Ryan (R-WI), the ranking member on the House Budget Committee, suggested privatizing the program, along the lines of the plan proposed by former President Bush in 2005. Florida's Republican Senate nominee Marco Rubio has said "proposals that have to be talked about" include raising the retirement age and cutting benefits for younger workers. Rep. Michele Bachmann (R-MN) said she simply wants to "wean everybody off" Social Security, while Nevada's Republican senate nominee Sharron Angle has called for it to be "phased out." Those launching the assault on Social Security are attempting to use the nation's budget deficit as an excuse to justify their desire to cut it. In fact, Alan Simpson, the Republican co-chair of President Obama's deficit commission, likened the program to "a milk cow with 310 million tits." But the arguments conservatives put forth for radically remaking a program that millions of Americans depend on are incredibly thin, especially given Social Security's relatively sound fiscal condition, which ensures its availability for decades. Here is a rundown of the three conservative views for reforming Social Security and why they all fail to pass the laugh test.

THE CUTTERS: Simpson and Rubio's argument that either the retirement age needs to be increased or benefits for future workers must be cut relies on the false claim that Social Security will, as Simpson claims, "go broke in the year 2037." In fact, Social Security is currently running a surplus and has built up a trust fund of $2.6 trillion. Because of this fund, according to the latest report from the Social Security Trustees, the program will be able to pay full benefits until 2037 -- and 75 percent of benefits for decades after that, which is very close to current benefit levels when adjusted for inflation -- with no modification at all. As the Center on Budget and Policy Priorities noted, "Alarmists who claim that Social Security won't be around when today's young workers retire either misunderstand or misrepresent the projections." In fact, the long-term gap between Social Security's revenue intake and benefits amounts to 0.7 percent of GDP, which "roughly matches the revenue loss over the next 75 years from extending the Bush tax cuts for people making over $250,000." So as the Center noted, lawmakers "cannot simultaneously claim that the tax cuts for the richest 2 percent of Americans are affordable while the Social Security shortfall constitutes a dire fiscal threat." Plus, as Economic Policy Institute economist Monique Morrissey explained, "When it comes to Social Security, Americans overwhelmingly prefer tax increases to benefit cuts -- even stealth cuts like raising the normal retirement age...But most of the gap can be closed without raising taxes on ordinary workers -- just those with earnings above the taxable earnings cap of $106,800."

THE PRIVATIZERS: Ryan, Pennsylvania's Republican senate candidate Pat Toomey, and Kentucky's Republican senate candidate Rand Paul have all expressed sympathy with the notion of privatizing at least a portion of Social Security, with Paul saying, "let young working people opt out, the sooner the better. Let 'em opt out and get a better investment." Sen. Jim DeMint (R-SC) has also said that he'd like to revive President Bush's social security privatization plan. But the financial market meltdown of 2008 provides a warning to those pushing for privatized accounts. According to an analysis by the Center for American Progress Action Fund, under a Bush-style privatization plan, an October 2008 retiree would have lost $26,000 in the market plunge of that year. In fact, because the economic crisis of 2008 did so much damage to both home prices and 401(k)-type accounts, "the huge cohort of baby boomers that is approaching retirement will be more dependent on Social Security than their predecessors." As the Center for Economic and Policy Research found, "The median household in the age cohorts from 55 to 64 has just $170,000 in total wealth, including equity in their home. Since this is roughly equal to the price of the median home, this means that they could fully pay off a mortgage and then would have nothing other than their Social Security to support them in retirement." Paul's opt-out plan, meanwhile, would cause the system to simply collapse, like any insurance program without a steady revenue stream.

THE TENTHERS: Finally, there are those like Alaska's Republican Senate candidate Joe Miller or Rep. John Shadegg (R-AZ) who simply seem to believe that Social Security is unconstitutional -- as it is not explicitly authorized in the Constitution -- and therefore want to eliminate it altogether. "For too long, the federal government has acted without constitutional restraint. In doing so, it has created ineffective and costly programs and massive deficits year after year," Shadegg said. But as the Wonk Room's Ian Millhiser pointed out, "The Constitution gives Congress the power 'to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States,' thus empowering the federal government to levy taxes and leverage these revenues to benefit the American people." And Social Security undeniably benefits the American people. According to the latest data available from the Census Bureau, 13 million seniors are kept out of poverty due to Social Security. In fact, "without Social Security, the poverty rate for those aged 65 and over would exceed 40 percent in 42 states." Social Security makes up a majority of income for more than half of the seniors in the country, and is particularly important for African-Americans and Hispanic seniors, representing at least 90 percent of income for about one-third of both populations.
 

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"[The Recovery Act has] done nothing to help the economy. It's far worse than it was when we signed over $750 billion that turned into $862 billion."
-- Fox News' Eric Bolling, 9/01/10

VERSUS

"[The Recovery Act] raised real (inflation-adjusted) gross domestic product (GDP) by between 1.7 percent and 4.5 percent, lowered the unemployment rate by between 0.7 percentage points and 1.8 percentage points, [and] increased the number of people employed by between 1.4 million and 3.3 million."
-- The Congressional Budget Office, 8/01/10