The Phony Social Security Crisis

The most popular and successful economic program of the 20th century is “currently threatened more than ever before in its 64 year-history,” according to Dean Baker and Mark Weisbrot, of the Center for Economic and Policy Research, in their study “Social Security-The Phony Crisis.”

The problem, they argue, is “not financial, economic, or demographic--the standard projections provide no basis for serious concern about the program’s financial survival.”

So what is the problem? “...that the public has become convinced that the program is in serious trouble.” A steady stream of misinformation, says Baker, could cause Social Security to be undermined or dismantled. In fact, without any changes at all, Social Security can continue as it is for the next 30 years. The dire predictions about the collapse in its revenue stream is based on annual economic growth of only 1.7%--only half the rate of the previous 3 decades. Very unlikely. But let’s say that happens. How then can social security be “saved”? Ronald Reagan did it back in the 1980s--by raising payroll taxes with no cuts in benefits. One part of that “deal” subjected up to half of Social Security benefits to income taxes for higher-income beneficiaries, and has put Social Security on a firm footing for over the last 30 years. Would that work today? How about everyone--including those who make over $106,800 a year--paying their fair share?

What is at risk is a program that removes fear of an impoverished old age from millions of workers. “Our economic environment fosters insecurity,” says Baker, and Social Security provides an element of security in that environment. It must be protected.