By now we’re aware that The Washington Post supports serious changes in Social Security. In fact, the paper editorialized Friday that the word “thuggish” comes to mind when discussing ads from the AARP opposing Social Security cuts. “The crunch time for the congressional super committee has arrived, and with it comes a new round of self-centered, shortsighted intransigence on the part of AARP and its fellow don’t-touch-my benefits purists,” the Post opined. But editorials are one thing; news stories are another.
At the end of October, the Post published a lopsided special report that strayed pretty far into opinion territory. The article, titled “The debt fallout: How Social Security went ‘cash negative’ earlier than expected,” offered bits and pieces of information about the country’s most popular government program—but didn’t come close to telling the whole story. In fact, William Greider, who writes about Social Security for The Nation, wrote that the Post “committed what I call fact-filled mendacity—a pejorative mash of scary buzz words and opaque statistics that encourages readers to reach false conclusions.”
First, the story tackled the system’s finances. “Last year, as a debate over the runaway national debt gathered steam in Washington, Social Security passed a treacherous milestone,” wrote Post reporter Lori Montgomery, asserting that the program went “cash negative” because the recession has “caused tax revenue to plummet” while “the cost of benefits outstripped tax collections for the first time since the early 1980s.”
This was misleading. In a letter to the editor, Janice Gregory, president of the National Academy of Social Insurance—a nonprofit, nonpartisan organization made up of the country’s leading experts on social insurance—wrote:
Social Security did not “go cash negative” in 2010. Such claims ignore the $118 billion that Social Security received in interest payments from the program’s $2.6 billion reserves, which are invested in US bonds. This interest is real cash and is legitimate income to the program, just as would be true of income on bonds held by you or me, China, a large bank, or any other entity.
Gregory, whose letter has not yet been published, told the paper that interest income had contributed to a $69 billion surplus in 2010, which was invested in more U.S. bonds.
Some revenue also comes from taxing a portion of recipients’ Social Security benefits, and that money goes into the trust fund as dedicated revenues. These revenue sources, along with payroll taxes, insure that full benefits can be paid until 2036. After that, the system will be able to pay seventy-five percent of expected benefits, a point the Post did make, albeit with a negative frame—“Benefits would have to be cut by about 25 percent across the board.” And supporters say small changes, like raising the amount of income subject to payroll taxes and subjecting some fringe benefits to the tax, are all that are needed to fix Social Security without cutting benefits.
“Social Security is sucking money out of the Treasury,” the Post warned, blaming the payroll tax holiday enacted last December as a way to boost the economy. “Replacing cash lost to a one-year payroll tax holiday will require an additional $105 billion,” the Post told readers. “If the payroll tax break is expanded next year, as President Obama has proposed, Social Security will need an extra $267 billion to pay promised benefits.”
Yes, the tax holiday law required that the Treasury replace the lost revenue to make sure seniors and disabled people still received their full benefits. But laying the blame on the tax holiday is a tad disingenuous, especially since the Post editorially supported the suspension of payroll taxes back in December as a “justified compromise.” And again in September it supported Obama’s call for extending and expanding the payroll tax cut, saying “it could encourage both spending and hiring.” To make the Social Security trust funds whole, there will need to be a transfer from the Treasury’s general fund, which would raise the deficit by the amount of the transfer. That could give ammunition to Social Security opponents who have implied the program contributes to deficits, which it does not.