I’ll say this for them: The Wall Street billionaires and corporate CEOs behind the "Campaign to Fix the Debt" have a lot of nerve. Once again they're using cheap scare tactics, along with some manipulative “nudging,” to drum up support for cutting Social Security benefits.
The money behind the latest scare campaign – “How Old Will You Be When Social Security’s Funds Run Out?” – also funds a TV ad that shows jobs, teachers, and roads and bridges vanishing, supposedly because the national debt wasn’t brought under control.
That’s pretty cynical, since their own ideas have led to lost jobs, teacher layoffs, and a lack of funds to repair roads and bridges.
Another ad says that people should confront politicians and “ask for a plan” – by which they mean a plan for reducing the national debt, not a plan for creating jobs, hiring more teachers, or repairing roads and bridges.
As we were saying: Some nerve.
There’s no need to revisit the evidence against Wall Street’s top executives, or the fact that many Wall Streeters are involved with Fix the Debt. There’s no need to recap the hidden agenda behind this campaign, or the fact that these would-be Social Security slashers all have great retirement plans of their own.
It is, however, worth mentioning that Fix the Debt’s CEOs reportedly avoided an estimated $1 billion in taxes between 2009 and 2011 with a single tax loophole.
They apparently feel this billion-dollar dodge gives them a solid moral foundation from which to propose benefit cuts for the elderly, the disabled, and children – because, they say, the government isn’t collecting enough revenue.
“How Old Will You Be When Social Security's Funds Run Out?”
It’s a trick question: Social Security's funds are never going to run out. If nothing is changed – if, for example, billionaires like the ones funding Fix the Debt don't pay more in taxes – Social Security’s retiree trust fund is expected to run out of money in 2034.
But even without any changes at all, Social Security would be capable of paying a majority of its current benefits … forever. That’s because it will continue to collect revenue forever (or at least the foreseeable future).
“Don’t think it will affect you very much?” the email continues. “We have a new tool that may change your mind.” A link then takes you to a calculator, where you type in your birth year and are told what percentage of your lifetime benefits could be lost. Then another link encourages you to "design your own fix" and takes you to something called "the Reformer."
"The Reformer” may sound like the name of a sadistic assistant vice principal’s favorite paddle, but it's actually an online calculator for modeling different Social Security budget alternatives. The first page offers nine different benefit cuts, along with their expected budgetary impact, and invites viewers to choose among them. The second tab offers six more benefit cuts.
Know what they don’t show? The percentage of your lifetime benefits that would be lost under these cuts.
Funny. That figure seemed so important a moment ago …
The second tab also offers three benefit increases, but they’re relatively small. An across-the-board benefit hike is not offered as an option, even though polling shows it's popular among both conservative and liberal voters.
The last tab finally offers viewers the opportunity to increase revenues, including by removing the payroll tax cap. That’s a step forward, since this crowd’s tools have tended to overlook revenue altogether. But it doesn’t give users a way to apply the Social Security payroll tax to investment income – a proposal that would target Wall Streeters and highly compensated CEOs like those in Fix the Debt.
That’s another striking omission, especially since Hillary Clinton (hardly an unknown entity in Wall Street circles) proposed it during the Democratic primary.
But they managed to include an option entitled "Invest in the Stock Market,” where we’re told that “diversify(ing) the trust fund to increase returns” would reduce Social Security's 75-year shortfall by 21 percent. What we’re not told is that it’s a risky proposition for Americans – but a great one for Wall Street’s investment funds.
This is a rather crude example of a technique that economists call “nudge,” where choices are presented in an ostensibly neutral way that subtly manipulates people toward a desired outcome. (Desired by the manipulators, that is.)
It takes four clicks – with a lot of work in between – before revenue enhancement is even mentioned. Most people will only see the alarming and deceptive statement about “funds running out.” Very few will get to the revenue. And when they do, important options will be missing.
But the sales pitch for Wall Street will be there.
Maya MacGuineas – who runs both Fix the Debt and its sister organization, the Committee for a Responsible Federal Budget – also sent out an email this week saying that "we can't borrow our way to prosperity." Actually, as Paul Krugman and others have explained, that's precisely how we can do it: by borrowing now, when the government can obtain funds at extraordinarily low rates, to invest in jobs and growth.
When more people are employed, when inequality goes down and middle-class wages go up, Social Security's revenues will go up, too. Somehow, despite all the money that’s been spent by Peterson’s organizations, this fundamental economic principle has been overlooked.
They must be panicking a little. For the first time in years, neither party’s presidential candidate says they want to cut Social Security. Hillary Clinton even says she wants to expand it (though she qualifies that statement somewhat).
Still, desperation is no excuse for bad behavior. It’s wrong to deceive and manipulate the public for selfish ends. They should stop trying to “reform” Social Security and start reforming their own behavior instead.
Who knows? Maybe there's even a “nudge” for that.
