The Myths and Fabrications of Social Security

 

Joe Conason wonders, Why are some Pundits and Politicians Hell-Bent on Undermining Social Security, in Spite of Its Success and Strength?

I don't need no stinking facts!

Among the mysteries of modern politics in America is why so many of our leading pundits and politicians persistently seek to undermine Social Security, that enduring and successful emblem of active government. In the current atmosphere of budgetary panic, self-proclaimed "centrists" are joining with ideologues of the right in yet another campaign against the program -- and yet again they are misinforming the public about its purposes, costs and prospects.

Among the puzzling aspects of the crusade against Social Security is the zeal that animates its enemies, as if the present and future recipients of those monthly checks were somehow fattening themselves at the expense of future generations. Whatever drives these well-fed but poorly informed commentators, it isn't the facts.

Social Security provides support.

First, let's remember that Social Security actually provides support at a very modest level. Last year, the average retirement benefit was $1,170 a month, or about $14,000 a year, with the average disabled worker or widow receiving slightly less. (It would be wonderfully educational for the cable talkers and newspaper editorialists to live on that amount for a few months -- they would not only lose weight but gain empathy.)

The US lags behind other countries in the amount of support.

Remember, too, that despite our status as the largest and most productive economy in the world, Social Security is among the least generous retirement programs among all the developed nations. As a percentage of the average worker's pre-retirement wages, the benefit has been declining for years and will continue to fall without any further cutbacks.

The check that used to replace 39 percent of worklife income will replace only 31 percent by 2031. Compare that with the average wage replacement in the nations belonging to the Organization for Economic Cooperation and Development (OECD) -- which was roughly 61 percent last year.

This is support that has been relied on by low waged workers.

More important than those comparative statistics is the fact that the great majority of Social Security beneficiaries have no other cushion for their retirement -- not because they were lazy or improvident, but because their wages were simply too low to permit much savings, let alone investment.

The foes of Social Security insist that they have no desire to force the elderly to eat cat food or go homeless -- as they did in the years before the program existed. But we must cut drastically, they cry, because we can simply no longer afford the "entitlements" that we have bestowed so lavishly upon the old and the poor.

Medicaid should not be confused with Medicare .

Whenever someone starts to talk about "entitlements," keep in mind that they are either trying to bamboozle or they've been bamboozled themselves. Under that category, most commentators mix up Medicaid and Medicare -- two programs that are indeed endangered by rising health care costs -- with Social Security, which will be solvent until at least 2037 and can easily be made solvent for decades to come with minor changes. This is a rhetorical deception perpetrated countless times every day in nearly every media outlet.

Fiscal challenges of Social Security can be solved without bankrupting the nation

The actuarial experts whose job is to monitor Social Security's fortunes have long assured us that small and gradual rises in the tax revenues that support Social Security, accompanied by small and gradual shifts in benefits over the coming years, will solve whatever fiscal challenges the program may eventually confront. There is no reason to panic, and there is certainly no reason to consider wholesale changes in benefits.

Wall Street will gain if Social Security is gutted

Well, there is a reason, but only if your real aim is to destroy the system and replace it with something less useful but more profitable. Wall Street and its servants on Capitol Hill have lusted after Social Security's revenues for many years. And they regard the current uproar over the budget as a fresh opportunity to get their hands on a trillion-dollar bonanza. Given their record in recent years, it is all too easy to imagine how badly that would work out for everybody -- except them, of course.

It's the Facts Stupid!

As consumers we all must listen to a variety of opinions and look beyond rhetoric to fact.  Today however, it is difficult to find politicians who in theory should be working for the people who they represent.  Instead, many politicians appear to work harder for the fat cat money changers on Wall St, the lobbyist who represent one side of the issue or corporations who  only look out for the interests of their stockholders.  As well it is more difficult to find independent, objective and reliable journalists to report on the lies, misrepresentations and lack of reporting of important issues.

Putting the Myths to Rest

For the naysayers of health care reform, Paul Krugman talks about Health Reform Myths.

So let me address three big myths about the proposed reform, myths that are believed by many people who consider themselves well-informed, but who have actually fallen for deceptive spin.

The first of these myths, which has been all over the airwaves lately, is the claim that President Obama is proposing a government takeover of one-sixth of the economy, the share of G.D.P. currently spent on health.

Well, if having the government regulate and subsidize health insurance is a “takeover,” that takeover happened long ago. Medicare, Medicaid, and other government programs already pay for almost half of American health care, while private insurance pays for barely more than a third (the rest is mostly out-of-pocket expenses). And the great bulk of that private insurance is provided via employee plans, which are both subsidized with tax exemptions and tightly regulated.

The only part of health care in which there isn’t already a lot of federal intervention is the market in which individuals who can’t get employment-based coverage buy their own insurance. And that market, in case you hadn’t noticed, is a disaster — no coverage for people with pre-existing medical conditions, coverage dropped when you get sick, and huge premium increases in the middle of an economic crisis. It’s this sector, plus the plight of Americans with no insurance at all, that reform aims to fix. What’s wrong with that?

The second myth is that the proposed reform does nothing to control costs. To support this claim, critics point to reports by the Medicare actuary, who predicts that total national health spending would be slightly higher in 2019 with reform than without it.

Even if this prediction were correct, it points to a pretty good bargain. The actuary’s assessment of the Senate bill, for example, finds that it would raise total health care spending by less than 1 percent, while extending coverage to 34 million Americans who would otherwise be uninsured. That’s a large expansion in coverage at an essentially trivial cost.

And it gets better as we go further into the future: the Congressional Budget Office has just concluded, in a new report, that the arithmetic of reform will look better in its second decade than it did in its first.

Furthermore, there’s good reason to believe that all such estimates are too pessimistic. There are many cost-saving efforts in the proposed reform, but nobody knows how well any one of these efforts will work. And as a result, official estimates don’t give the plan much credit for any of them. What the actuary and the budget office do is a bit like looking at an oil company’s prospecting efforts, concluding that any individual test hole it drills will probably come up dry, and predicting as a consequence that the company won’t find any oil at all — when the odds are, in fact, that some of the test holes will pan out, and produce big payoffs. Realistically, health reform is likely to do much better at controlling costs than any of the official projections suggest.

Which brings me to the third myth: that health reform is fiscally irresponsible. How can people say this given Congressional Budget Office predictions — which, as I’ve already argued, are probably too pessimistic — that reform would actually reduce the deficit? Critics argue that we should ignore what’s actually in the legislation; when cost control actually starts to bite on Medicare, they insist, Congress will back down.

But this isn’t an argument against Obamacare, it’s a declaration that we can’t control Medicare costs no matter what. And it also flies in the face of history: contrary to legend, past efforts to limit Medicare spending have in fact “stuck,” rather than being withdrawn in the face of political pressure.

So what’s the reality of the proposed reform? Compared with the Platonic ideal of reform, Obamacare comes up short. If the votes were there, I would much prefer to see Medicare for all.

For a real piece of passable legislation, however, it looks very good. It wouldn’t transform our health care system; in fact, Americans whose jobs come with health coverage would see little effect. But it would make a huge difference to the less fortunate among us, even as it would do more to control costs than anything we’ve done before.

This is a reasonable, responsible plan. Don’t let anyone tell you otherwise.

Although Krugman counters each of the myths, he also acknowledges that this legislation is not a panacea for all. Hopefully, this is just the start.