Some Truth About Social Security

Via FAIR:

When the first baby boomer filed for Social Security, ABC News and the Washington Post's Dana Milbank led the pack in media scaremongering--pushing the widely disputed myth of a pending crisis while dismissing the less alarmist views espoused by many economists.

At the top of ABC's October 15 World News with Charles Gibson, the anchor declared this a "day of reckoning," later calling it "one of this country's greatest challenges." Correspondent David Wright called the first baby boomer filing for benefits "the raindrop that's about to become a tsunami," and warned that "paying for the baby boom's retirement may leave the next generation high and dry." The Post's Milbank (10/16/07) went further, claiming that baby boomers "will begin to bankrupt the nation."

The crisis claims in each report were more or less the same. According to ABC's Wright, "In 10 years time, Social Security will be paying out more in benefits than it takes in in taxes. And about the time the last of the baby boomers retires, the system will go bankrupt." As Milbank put it, "As the boomers retire, Social Security will go into the red in 2017 and become insolvent 24 years later, according to the system's trustees."

This rhetoric is profoundly misleading. Social Security has built up a massive surplus in order to pay for the long-anticipated retirement of the baby boomers. As FAIR reported in 2005 (Extra!, 1-2/05):


The Social Security Administration predicts the program will be able to fully pay all promised benefits through 2042, when most baby boomers will be dead--even using pessimistic assumptions about future economic growth. Annual productivity growth is forecast by SSA at only 1.6 percent through 2078; in the years 1913-1990 (including the Great Depression), it grew by about 2.3 percent, a rate that would more than wipe out any future shortfall (2004 Social Security Trustees' Report; The World Economy, OECD, 2001).

But for most of the media, no such context is allowed. The sole economic expert who appeared on ABC was David John of the right-wing Heritage Foundation, who likened the situation to a "horror movie." Milbank chided a Social Security commissioner for "whistling past the graveyard of entitlement insolvency" because he had the temerity to say, "There's no reason to have any immediate panic." Milbank even suggested that young people are "more likely to believe in UFOs than in receiving their Social Security checks"--a claim based on a misleading poll (Extra!, 3-4/97). Milbank offered the usual prescription--namely, "painful changes everybody knows will be needed."

But "everybody" does not agree with this assessment.

A few weeks ago, former Federal Reserve chair Alan Greenspan--whose word the media usually takes as a kind of gospel--told Tim Russert on Meet the Press (9/23/07) that there was no urgent Social Security crisis at all. "Social Security is not a big crisis," Greenspan explained. "We're approximately 2 percentage points of payroll short over the very long run. It's a significant closing of the gap, but it's doable, and doable in any number of ways."

Renowned Princeton economist and New York Times columnist Paul Krugman (New York Times, 12/7/04) has similarly debunked the notion that Social Security is heading into a crisis. The long-term financing of Social Security is "a problem of modest size....It's not at all hard to come up with fiscal packages that would secure the retirement program, with no major changes, for generations to come."

Dean Baker of the Center for Economic & Policy Research has written frequently about the overhyping of the system's long-term financial shortfall. (See Baker's co-authored book with Mark Weisbrot, Social Security: The Phony Crisis, 1998, and Baker's blog Beat the Press.)

ABC's Wright segued neatly from misleading about the problem to distorting the solution: "Of course, it's perfectly obvious how to fix it, either raise taxes or cut benefits. The politicians have been unwilling to do either." What is "perfectly obvious" is that in 1983, the Social Security Commission chaired by Alan Greenspan did raise taxes and cut benefits to create the surplus that now exists to pay for the retirement costs of baby boomers (American Prospect, 1/14/05).

With Americans' hard-earned Social Security money on the line, there is an urgent need for journalists to provide the public with accurate information, based on solid economic analysis. Yet instead of taking cues from economists, the media have decided to base their coverage on hyperbole from right-wing think tanks.

ACTION:
Encourage ABC and the Washington Post to stop inaccurate fear-mongering about Social Security, and expand their coverage to include experts who argue against the claims of an imminent Social Security "crisis."