Meanwhile, while we’re pointing out games journalists play and the question of whether Social Security is welfare, WaPo’s Robert J. Samuelson says this:
In a recent column on the senior citizen lobby, I noted that Social Security is often “middle-class welfare” that bleeds the country. This offended many readers. In an e-mail, one snarled: “Social Security is not adding one penny to our national debt, you idiot.” Others were more dignified: “Let’s refrain from insulting individuals who have worked all their lives and contributed to the system for 50-plus years by insinuating that [their] earned benefits are welfare.” Some argued that Social Security, with a $2.6 trillion trust fund, doesn’t affect our budgetary predicament.
Wrong. As a rule, I don’t use one column to comment on another. But I’m making an exception here because the issue is so important. Recall that Social Security, Medicare and Medicaid, the main programs for the elderly, exceed 40 percent of federal spending. Exempting them from cuts - as polls indicate many Americans prefer - would ordain massive deficits, huge tax increases or draconian reductions in other programs. That’s a disastrous formula for the future.
Notice the bait and switch there? The headline and the first graph are all about Social Security and how bad it is and what a budget-buster it is. Then Samuelson conflates Social Security with Medicare and Medicaid in the second graph. Social Security on its own accounts for 20 percent of federal spending. Samuelson needed a bigger number to alarm us about the program, I suppose.
That sleight of hand obscures that Social Security outlays now account for about 5 percent of GDP. That’s projected to skyrocket over the next two decades to… 6 percent of GDP, according to the CBO and then level off. It’s a program that needs some tweaking. Medicare and Medicaid, meanwhile will actually skyrocket, moving from 5 percent of GDP today to 10 percent in 2035 and will keep going up. They’re programs that need radical reforms.
And the Social Security trust fund is real, and it funds all payouts through 2037, and more than three quarters are covered by payroll taxes after that.
See why it’s deceptive to conflate Social Security with Medicare and Medicaid?
And the Social Security trust fund is real
Ryan, I've pointed out before that the fund isnt real because there are no "real" assets backing it up.
All bonds issued to the Social Security Administration are non-negotiable and non transferable. An asset is something that transferable to anyone: real estate, stocks, bonds, a case of scotch etcetera. The special issue bonds held by the Social Security Administration are not real assets, no one from the SSA can sell these bonds on the open market or redeem them at the Fed unless congress authorizes it. I am not even sure if they are enforceable if push came to shove … who has the legal authority to force the fed to repay these special bonds?
#1 Posted by Mike H, CJR on Thu 10 Mar 2011 at 01:16 PM
Ryan, if a private pension fund were run like Social Security - promises of unfunded benefits - its leaders would be prosecuted and CJR would be throwing garlands at any journalist who exposed it. It fits the classic definition of a Ponzi scheme - payout promises depend on attracting in more 'investors'. You can defend Social Security as an idea or pick nits with writers Robert Samuelson (to the exclusion of writers on the Left, of course, whose claims seldom attract your scrutiny), but to defend it on the basis of 'real' numbers is misleading.
#2 Posted by Mark Richard, CJR on Thu 10 Mar 2011 at 04:57 PM
Whatever you think is the right perspective on the trust fund, it's wrong to pretend that social security is a debt driver in one sentence and use all entitlements as proof in the next.
Medicare is screwed because of medical industry cost inflation + medicare's accept all "your tired, your poor, your huddled elderly masses" mandate. And I don't see the republicans doing anything about medical cost inflation except making the problem grow worse through unfunded
gifts to the pharmaceuticalsbenefit expansion. (Of course that problem may solve itself: http://www.slate.com/blogs/blogs/scocca/archive/2011/03/08/pharmaceutical-industry-near-collapse-because-it-is-stupid-and-incredibly-bad-at-its-business.aspx )Social Security's not the same. It's growth is going to flatline
(See the graph "Projected Federal Spending Over the Long Term"
http://cbo.gov/ftpdocs/89xx/doc8935/01-23-OutlookSlides.pdf
)
More in a sec.
#3 Posted by Thimbles, CJR on Thu 10 Mar 2011 at 09:52 PM
And what kind of welfare program produces revenue for the government:
http://assets.motherjones.com/politics/2011/inequality-taxrate_3.png
which then pay "things like, say, the Bush tax cuts, wars, and economic stimulus."
http://www.cjr.org/the_audit/audit_notes_more_murdoch_hiltz.php
It's not welfare, it's a mandatory savings program who's revenues right wingers used to justify cutting corporate and high income earners share of government revenue (oh, maybe it's welfare for the rich) based on a promise that the government would produce the revenue when the baby boomers retire.
That would involve raising taxes, so people don't want to do that.
#4 Posted by Thimbles, CJR on Thu 10 Mar 2011 at 10:08 PM
Things would be so much easier if old people had the courtesy to die.
http://yglesias.thinkprogress.org/2011/02/how-to-run-america-like-a-business-get-rid-of-all-the-old-people/
#5 Posted by Thimbles, CJR on Thu 10 Mar 2011 at 10:12 PM