A response to the Social Security ‘smear campaign’
Claims that Social Security is a Ponzi scheme are just part of a continuing right-wing campaign to smear our most successful, and most popular, government program.Social Security was created in 1935 to solve a problem: millions of Americans were living in poverty due to retirement or the death of the family breadwinner. The solution was simple: a system where every worker pays in, and in return is guaranteed a retirement income. Benefits for widows, orphans and the disabled are also part of the deal.The system worked. Poverty among the elderly has declined from about 60 percent in the 1930s to about 10 percent today.Social Security is not a retirement fund, it is social insurance. Your taxes are like insurance premiums that qualify you for benefits. The benefits you receive during your lifetime could be more or less than what you pay into the system.If you die young and leave behind children, Social Security will pay benefits for your children until they are 18. No IRA will do that. If you live to be 110, your Social Security checks will never run out. No 401(k) plan will do that. If you become disabled and unable to work, Social Security has you covered, every month. No “individualized account” will do that.Our nation is struggling with huge budget deficits, but Social Security is not to blame. In 2010, Social Security benefits exceeded Social Security taxes by $49 billion, but that was only about 3 percent of the federal deficit, and the shortfall was covered by the $2.5 trillion Social Security Trust Fund. Social Security scare tactics include claims that it has unfunded liabilities of “over $20 trillion.” This fanciful figure comes from adding up all future benefits, as if we must have all that future money on hand now. But Social Security has always been a system in which today’s workers are paying for today’s retirees. It’s worked for over 75 years, and there’s no reason it can’t continue to work.We fund Social Security the same way we fund the Department of Defense — current expenditures are paid out of current tax revenue. We know we have huge future defense obligations, due to our treaties with allies, long-term weapons contracts, and the cost of caring for veterans. Our long-term, unfunded defense obligations are in the trillions of dollars. This is a scary number only if we assume we have to pay it today, and ignore expected future tax revenues.The payout of Social Security benefits is rising faster than tax revenue due to the retirement of the baby boomers, and longer life expectancy. This doesn’t mean the system is broken. It simply means that we need to make adjustments, by raising taxes, lowering benefits, and/or delaying the retirement age. Small changes enacted now can have a huge impact over the long term.Some Democrats in Congress have pointed out that requiring those with incomes over $250,000 to pay the same Social Security tax as regular working folks would provide the system with enough revenue for the next 75 years.Social Security faced a similar challenge in the 1980s, when it appeared the system would run out of money. Congress and President Reagan agreed to a package of changes, including tax increases and a later retirement age. There is no reason changes in the system cannot be made now, preserving the long-term health of Social Security for our grandchildren and beyond.Mark Fernald of Sharon was the Democratic nominee for governor in 2002.