Let's Bury the Rhetoric; Not Social Security

The 2012 Social Security Trustees Report should be used as motivation to get serious about solving the actual problems facing Social Security; not as a reason to bury Social Security.

The report's intended goal ⎯ provide an assessment of program finances and serve as an early warning system ⎯ was widely overlooked recently as multiple media outlets declared the untimely death of our Social Security system.

However, Michael Hiltzik of the Los Angeles Times and other advocates for strengthening Social Security have used the report as an opportunity to challenge policy makers to fix Social Security and address some of the myths surrounding the nation's most conservatively financed and carefully monitored public program.

"It's time to shut down the talk of cutting benefits, which serves nobody, and pump up the volume on making them better," said Hiltzik.

The sky is not falling and neither is Social Security

Social Security keeps 20 million Americans out of poverty and helps stabilize the economy by putting money in the hands of people who will spend it on goods and services. Furthermore, the program still ran a surplus of $69 billion last year despite facing the worst economic conditions in its history.

The Trustees Report tells us that without any current changes to Social Security's structure, benefits would need to be reduced ⎯ not totally eliminated ⎯ in the year 2033.

"This exhaustion date is a moving target. Most recently, you can clearly see the impact of the recession in the trust fund's erosion, because with fewer people working (or working fewer hours at lower wages), the flow of payroll taxes into the trust fund is diminished. But as the economy improves, the end date may be moved back in time, as was the case in the 1990s," says Jared Bernstein of the Center on Budget and Policy Priorities.

Social Security can be fixed

The real problem with Social Security is that its retirement benefits are less than $1,200 per month for millions of low wage workers with no other source of retirement income. There is a retirement security crisis in America that threatens nearly half of workers who will not be able to maintain their standard of living in old age.

Some experts believe that the best way to improve Social Security's value is by increasing benefits for low-income earners, while others call for expanding the program to include public sector workers who are not eligible for benefits.

However, all can agree that a simple adjustment to the system's funding formula ⎯ or raising the cap on Social Security taxes ⎯ so that everyone pays their fair share will ensure Social Security's solvency and improve its benefits for current retirees. Current law taxes only the first $110,100 of wages for Social Security, so all wages above that level, as well as all investment income, is exempted from Social Security taxes. Experts also believe that the Social Security Trustees Report provides us with an opportunity to discuss strengthening Social Security as a solution to the retirement crisis. "Isn't it curious that the same people who insist that America is the greatest, richest country in the world, ever, are those who insist that there's no way we can afford to provide for our elderly, our disabled and the survivors of our deceased workers to the same degree as the rest of the industrialized world?"

"The received wisdom among political insiders is that today's hyper-partisan atmosphere in Washington makes any talk of raising Social Security benefits a non-starter. But maybe this is exactly the moment to turn the conversation around," says Hiltzik.

More importantly, policy makers should use the report as motivation to get serious about solving the actual problems facing Social Security. Rhetoric about a crisis that has no basis in fact may make for good sound bites but it doesn't do anything for the 55 million Americans depending on Social Security.