Ten days ago, the AP reported that Social Security “is projected to pay out more in benefits than it collects in taxes” this year, the first time that’s happened since Congress overhauled the program in the 1980s.
Today that milestone became news all over again, with a front page story in The New York Times that raises some interesting questions about this government program and how the press covers it.
For some observers, the mere mention of impending troubles for Social Security amounts to a scare tactic, part of a grand effort to build public support for chipping away at the federal program and the benefits it provides.
But we’re inclined to cut newspapers some slack. This is an important bit of the American economy and society, and, at some point down the line, it’s going to need some adjusting. The health of Social Security merits serious, sustained, incremental beat reporting—even if that can’t always be done at the thousands of words it might take to convey every subtlety of the program and its finances.
And so, on balance, this Times piece seems to deserve its spot in the paper. The milestone is an interesting one:
This year, the system will pay out more in benefits than it receives in payroll taxes, an important threshold it was not expected to cross until at least 2016, according to the Congressional Budget Office.
The Times quickly makes clear that the change won’t have an effect on benefits paid out this year. And it provides some important context to help readers make sense of the situation: “[P]ayments have risen more than expected during the downturn, because jobs disappeared and people applied for benefits sooner than they had planned. At the same time, the program’s revenue has fallen sharply, because there are fewer paychecks to tax.”
There’s also some useful background from the chief actuary of the Social Security Administration that puts things in perspective.
Mr. Goss, the actuary, emphasized that even the $29 billion shortfall projected for this year was small, relative to the roughly $700 billion that would flow in and out of the system. The system, he added, has a balance of about $2.5 trillion that will take decades to deplete. Mr. Goss said that large cushion could start to grow again if the economy recovers briskly.
Unfortunately, though, if you’re looking for alarm bells, the Times provides them, too, and they’re a bit louder than they need to be.
While the actuary and Congressional Budget Office projections cited in the story make clear that an improving economy will improve Social Security’s finances, the headline sees only gloom:
Social Security to See Payout Exceed Pay-In
At Tipping Point Years Ahead of Projection
That’s followed up with this:
Analysts have long tried to predict the year when Social Security would pay out more than it took in because they view it as a tipping point — the first step of a long, slow march to insolvency, unless Congress strengthens the program’s finances.
“When the level of the trust fund gets to zero, you have to cut benefits,” Alan Greenspan, architect of the plan to rescue the Social Security program the last time it got into trouble, in the early 1980s, said on Wednesday.
Words like “insolvency” are part of the code those anti-alarmists look for. And Greenspan only fuels their fears, moving quickly as he does from the current milestone of payouts exceeding receipts to the complete erosion of that trust fund with the $2.5 trillion balance.
What the piece doesn’t make clear is that the tapping of the trust fund is expected to be a temporary measure, to be halted when the economy recovers and payroll taxes revive. Does that make the ultimate day of baby-boomer reckoning—now projected in 2037—any closer? Or is this just a temporary blip? Also, just cuz I’m curious: If the downturn prompted some early retirements, is there any chance a recovery would see those folks go back to work, and stop drawing their benefits?
The story’s reliance on Greenspan is also a bit of a problem. Sure, as the Times points out, he played a central role the last time Social Security was restructured. But these days, he’s busy explaining what he saw—and did—at “The Crisis,” and this story could do with another voice from outside the Social Security Administration that isn’t his.
The Times also falls into that Internet-era trap of thinking more information is necessarily better.
This CBO chart linked to in the piece shows “total income” exceeding “total outgo” for as long as the eye can see. That looks like a healthy account to me. Is the problem revenues v. benefits? And what does that footnote on “other income” really mean?