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?