“Social Security’s annual tax revenue has slipped below the benefits it pays each year,” said Robert Greenstein, president of Center on Budget and Policy Priorities, a Washington-based nonpartisan research and policy institute. “That was long expected to happen in the latter half of this decade, but the weak economy has taken a toll on Social Security, as on many other parts of the budget.”
But that’s only half of the story.
Greenstein explained, “That imbalance, however, does not jeopardize Social Security benefits (and ought not to worry recipients), because Social Security can draw on its trust fund – which stands at nearly $2.7 trillion and will keep growing until 2020 – to enable it to continue paying full benefits for some years to come.”
After reviewing the Social Security trustees report, Rep. John Lewis (D-Ga.) said, “This report should lay the fears of many people to rest. Many of the Democrats on the Ways and Means Committee have been trying to shout above a flood of misinformation that one of the best run and most effective government programs ever devised is still inherently sound and should remain an important federal investment.”
Lewis added, “The people need to ask why some of their representatives were arguing in favor of privatization when the program still demonstrates a great deal of vitality. And with modest adjustments Social Security could continue to provide security and stability for seniors many decades in the future.”
Nearly all Americans have some contact with Social Security, first as a worker and later as a beneficiary. African-Americans disproportionately rely on the program’s benefits.
According to the Social Security Administration, 57 percent of unmarried elderly Blacks relied on Social Security in 2010 for at least 90 percent of their income. Although Blacks represent 12.6 percent of the U.S. population, 23 percent of all children receiving Social Security survivor benefits were African American. In addition, 18 percent of disabled workers receiving benefits were Black.
Despite its unqualified success, Social Security has been used as a political football.
During one debate, former Republican presidential candidate Rick Perry described Social Security as a “Ponzi scheme.”
Nothing could be further from the truth.
As Media Matters noted, “A Ponzi scheme is a criminal endeavor that involves opaque financial dealings that promise investment returns when none or next to none actually exists. Social Security finances are crystal clear, and the interest generated by its trust fund is quite real.”
Television outlets are equally guilty.
For example, CNN Money published an article in April saying, “Critical to reining in the United States’ long-term debt will be finding ways to control the burgeoning costs of Medicare and Social Security, both of which will face serious funding shortfalls over the next decade.”
There was only one problem – the chart that accompanied the story painted a different picture.
“The chart shows that ‘entitlements’ growing share of [the] economy is really just Medicare’s growing share of the economy – and higher spending on Medicare is a result of rising health care costs,” observed Media Matters. “Social Security costs are not ‘burgeoning,’ and to claim they are does a disservice to CNN’s readers.”
Undeserved criticism of Social Security notwithstanding, supporters acknowledged that changes can be made to improve the system.
Repealing the Bush tax cuts alone would fix the problem.
“The revenue lost over the next 75 years from making those tax cuts permanent would be about two times the entire Social Security shortfall over that period,” the Center on Budget and Policy Priorities calculated. “Indeed, the revenue loss from just extending the tax cuts for people making over $250,000 – the top 2 percent of Americans – would itself be nearly as large as the entire Social Security shortfall over the 75-year period. Members of Congress cannot simultaneously claim that the tax cuts are affordable while the Social Security shortfall constitutes a dire fiscal threat.”
Other improvements can be made as well.
The system can be strengthened by stabilizing the contribution rates. Currently, those making $50,000 contribute 6 percent of their wages to Social Security. However, those making more than $500,000 contribute only 1 percent.
Congressman Lewis said, “It should be noted that the Social Security system has borne the significant pressure of a crashing economy remarkably well and that, unlike the banks, it did not require a bailout.”