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Stop attacking Social Security

By August 17, 2010

The New York Times

Social Security turned 75 last week. It should have been a joyous occasion, a time to celebrate a program that has brought dignity and decency to the lives of older Americans.

But the program is under attack, with some Democrats as well as nearly all Republicans joining the assault. Rumor has it that President Barack ObamaÕs deficit commission may call for deep benefit cuts, in particular a sharp rise in the retirement age.

Social SecurityÕs attackers claim theyÕre concerned about the programÕs financial future. But their math doesnÕt add up, and their hostility isnÕt really about dollars and cents. Instead, itÕs about ideology and posturing. And underneath it all is ignorance of or indifference to the realities of life for many Americans.

About that math: Legally, Social Security has its own, dedicated funding, via the payroll tax (ÒFICAÓ on your pay statement). But itÕs also part of the broader federal budget. This dual accounting means that there are two ways Social Security could face financial problems. First, that dedicated funding could prove inadequate, forcing the program either to cut benefits or to turn to Congress for aid. Second, Social Security costs could prove unsupportable for the federal budget as a whole.

But neither of these potential problems is a clear and present danger. Social Security has been running surpluses for the past quarter-century, banking those surpluses in a special account, the so-called trust fund. The program wonÕt have to turn to Congress for help or cut benefits until or unless the trust fund is exhausted, which the programÕs actuaries donÕt expect to happen until 2037 Ñ and thereÕs a significant chance, according to their estimates, that that day will never come.

Meanwhile, an aging population eventually will (over the course of the next 20 years) cause the cost of paying Social Security benefits to rise from its current 4.8 percent of GDP to about 6 percent of GDP. To give you some perspective, thatÕs a significantly smaller increase than the rise in defense spending since 2001, which Washington certainly didnÕt consider a crisis, or even a reason to rethink some of the Bush tax cuts.

So where do claims of crisis come from? To a large extent they rely on bad-faith accounting. In particular, they rely on an exercise in three-card monte in which the surpluses Social Security has been running for a quarter-century donÕt count Ñ because hey, the program doesnÕt have any independent existence; itÕs just part of the general federal budget Ñ while future Social Security deficits are unacceptable Ñ because hey, the program has to stand on its own.

It would be easy to dismiss this bait-and-switch as obvious nonsense, except for one thing: Many influential people Ñ including Alan Simpson, co-chairman of the presidentÕs deficit commission Ñ are peddling this nonsense.

And having invented a crisis, what do Social SecurityÕs attackers want to do? They donÕt propose cutting benefits to current retirees; invariably the plan is, instead, to cut benefits many years in the future. So think about it this way: In order to avoid the possibility of future benefit cuts, we must cut future benefits. OK.

WhatÕs really going on here? Conservatives hate Social Security for ideological reasons: Its success undermines their claim that government is always the problem, never the solution. But they receive crucial support from Washington insiders, for whom a declared willingness to cut Social Security has long served as a badge of fiscal seriousness, never mind the arithmetic.

And neither wing of the anti-Social Security coalition seems to know or care about the hardship its favorite proposals would cause.

The currently fashionable idea of raising the retirement age even more than it will rise under existing law Ñ it has already gone from 65 to 66, itÕs scheduled to rise to 67, but now some are proposing that it go to 70 Ñ is usually justified with assertions that life expectancy has risen, so people can easily work later into life. But thatÕs only true for affluent, white-collar workers Ñ the people who need Social Security least.

IÕm not just talking about the fact that itÕs a lot easier to imagine working until youÕre 70 if you have a comfortable office job than if youÕre engaged in manual labor. America is becoming an increasingly unequal society Ñ and the growing disparities extend to matters of life and death. Life expectancy at age 65 has risen a lot at the top of the income distribution, but much less for lower-income workers. And remember, the retirement age is already scheduled to rise under current law.

So letÕs beat back this unnecessary, unfair and Ñ letÕs not mince words Ñ cruel attack on working Americans. Big cuts in Social Security should not be on the table.

Ñ The New York Times

Paul Krugman

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