Editor's Note: We're publishing a series of "Making Sense" fact sheets on key economic issues to help you win the debate on the core issues facing middle-class families. Each fact sheet contains information, talking points and resources you can use to make the case for progressive policies. Yesterday: Curbing Wall Street. Today: Social Security.
From the moment that President Franklin D. Roosevelt signed the Social Security Act on August 14, 1935, conservatives have attacked and tried to dismantle the program. Alf Landon, the 1936 Republican presidential candidate, based his entire campaign on attacking Social Security and vowed to "repeal" it.
Today Social Security enjoys overwhelming popular support due to its success in alleviating poverty and providing income security to millions of Americans. Nonetheless, conservatives today are still bent on dismantling Social Security, claiming that the program is adding to the federal deficit and is essentially bankrupt. Neither claim is true, but that has not stopped conservative politicians from proposing such “solutions” as privatization—trading the stability of Social Security benefits for the roller-coaster of Wall Street. Others call for raising the retirement age, a way to mask significant cuts in benefits. Meanwhile, a White House commission on deficit reduction has also targeted Social Security for “reform,” even though Social Security shouldn’t even be on the commission’s agenda.
Social Security is not an “entitlement” that needs to be “cut”; it is a vital lifeline for millions that needs to be strengthened.
Social Security is the federal government’s most successful and most appreciated anti-poverty program. It offers a secure retirement for most Americans as well as disability insurance to families in the event of the death or disability of a breadwinner. Its benefits, though modest, lift millions of Americans out of poverty. And, its administrative costs are less than one penny of every dollar spent.
Fears stoked by conservatives about a long-range funding gap are overblown. Currently, the Social Security trust fund has a $2.6 trillion accumulated surplus, which will grow to $4.2 trillion by 2025. Social Security could finance itself just fine – if the economy grows, people get back to work, and wages rise with rising productivity.
But if the economy continues to falter, the system could face a financing gap far in the future – more than a quarter of a century from now – and the gap would be very modest, the equivalent of the costs of maintaining the Bush tax cuts for the top 2% of Americans. We don’t have to raise the retirement age or otherwise cut the benefits of future retirees to close that gap.
Social Security is a promise to all Americans that has withstood the test of time and represents the best of American values – rewarding hard work, honoring our parents and caring for our neighbors. Its benefits should be increased, not cut.
By law Social Security cannot borrow any money. By law Social Security cannot contribute to the deficit. But conservatives still target Social Security for cuts while ignoring the real causes of the federal deficit, such as the 2001 and 2003 Bush tax cuts for the wealthy.
Conservatives are using a disinformation campaign to justify turning Social Security into a bonanza for Wall Street. Several high-profile conservative politicians have embraced privatization, which would gamble America’s retirement savings on the stock market. It’s essentially the same plan that almost all of the Republicans in the U.S. Senate voted for in 2005, even if it is couched in different rhetoric because polls show the idea to be highly unpopular.
Social Security is also potentially threatened by the outsourcing of policy making to a White House National Commission on Fiscal Responsibility and Reform. This closed-door commission is loaded with conservatives, and public statements made by many of its members show an unjustifiable obsession with gutting Social Security. Its deliberations are designed to produce a document that, if 14 of its 18 members agree, would be sent to Congress for an up-or-down vote with no amendments during Congress’ post-election lame-duck session. This sets up the potential, as The Nation's William Grieder puts it, to "offer Social Security as a sacrificial lamb to entice conservative deficit hawks into a grand bipartisan compromise" on deficits and taxes.
With many Americans having lost savings and investments in the financial collapse and more than half relying primarily on Social Security for their retirement, the last thing we should do is cut Social Security benefits. With over 20 million people looking for full-time work, and many older workers displaced, raising the retirement age makes no sense. Social Security should be strengthened, not cut.
If the economy remains stagnant and unemployment continues to be high, any projected shortfall in the Social Security trust fund can be covered almost entirely by requiring high-income workers to pay the same percentage of Social Security taxes as the rest of us (by lifting the cap on wages subject to the Social Security payroll tax, now $106,800). There's no rush to impose a Draconian solution.
Social Security did not cause the federal deficit.
- Social Security has not contributed one dime to the federal deficit. In fact, Social Security has a $2.6 trillion surplus today that is projected to increase to $4.2 trillion in 2025.
- The primary causes of the nation’s recent large deficits have been President Bush’s tax cuts in 2001 and 2003, the economic downturn and the costs of the Iraq and Afghanistan wars.
- The government’s long‐term deficit challenge comes almost entirely from health-care costs. Medicare and Medicaid costs are projected to grow slower than private health-care costs, but still rise from about 5.3% to 17.2% of gross domestic product from 2009 to 2081, according to the Congressional Budget Office. Social Security costs are projected by actuaries to grow only from about 4.8% to 6.1% by 2035, and then decline to 5.9% of GDP in 2050 and remain there after that.
Social Security is not in crisis.
- Claims that Social Security cannot pay its bills in 2010 are false. Social Security outlays will exceed tax revenues for the next two years, an unremarkable event that has occurred 15 times since 1956. Social Security will still run a $76.7 billion surplus in 2010 due to its investment income.
- Social Security can pay all its bills in full through 2037. Even if Congress takes no action to close the long‐range funding gap, Social Security will still be able to pay at least 75% of promised benefits after 2037.
Broad majorities oppose cutting Social Security benefits in order to address the deficit:
- 81% oppose; 71% strongly oppose (Social Security Works poll by Lake Research)
- 85% oppose; 72% strongly oppose (AARP poll by GfK Roper)
- 68% oppose; 58% strongly oppose (CAF poll by Democracy Corps)
Raising the retirement age is rejected by a two-to-one margin:
- 64% oppose raising the retirement age from 67 to 69 years; 50% strongly oppose. (Social Security Works poll by Lake Research)
- 66% oppose raising the retirement age to 70; 52% strongly oppose. (CAF poll by Democracy Corps)
Privatization is opposed by overwhelming majorities:
- 79% percent agree Social Security should provide guaranteed benefits; only 19% favor making Social Security more like an investment account (Social Security Works poll by Lake Research)
- 68% oppose; 58% strongly oppose (CAF poll by Democracy Corps)
There is broad support for increasing revenue to secure Social Security's long-term future:
- Taxing the Rich:
- 58% of Americans support taxing estates worth more $3.5 million as solvency or debt measure. (Social Security Works poll by Lake Research)
- 59% of American support financial tax on Wall Street speculation as solvency or deficit measure. (Social Security Works poll by Lake Research)
- Raising the Payroll Tax Cap:
- 63% of Americans favor lifting Social Security payroll tax cap on incomes higher than $106,800. (CAF poll by Democracy Corps)
- 65% of Americans favor gradually lifting Social Security payroll tax cap on incomes higher than $106,800 as a solvency measure. (Social Security Works poll by Lake Research)
- Bush Tax Cuts
- 54% of Americans supports letting Bush tax cuts expire for those making above $250,000. (CAF poll by Democracy Corps)