Wednesday, February 15, 2023

Even Now, the Attacks on Social Security and Medicare Will Not Stop

by Neil H. Buchanan

As political strategies go, President Biden's attack last week on the Republicans who have been attacking Social Security and Medicare worked brilliantly -- most likely beyond what anyone in the White House had planned or even dared to hope.  My guess is that the Biden team, as they thought through his State of the Union address and what to highlight,  thought (rightly) that they could position themselves in a favorable political light by pointing out that various Republicans have been very vocal over the years in trying to cut, privatize, or simply eliminate those two wildly popular government programs.

Did they expect the political gift that Republicans offered in response?  I honestly doubt it, but who cares?  The Republican caucus, rather than doing what most people would have anticipated them doing, which is to go on the talk shows and try to say that they have always been at war with Eastasia loved Social Security and Medicare and that it is the dastardly Democrats who cannot be trusted, instead jeered and heckled Biden like middle schoolers, calling him a LIAR for saying that any Republicans would suggest sunsetting the two big middle-class social insurance programs.  They could not bear even for a moment the idea that Biden could say something about them that, while true, was politically uncomfortable.

Few people have ever thought of Biden as being an agile in-the-moment debater, but he certainly timed his coming-out party well.  Again, it seems unlikely (though hardly impossible) that he could have planned for this, but he deftly seized the moment and said, in essence: You've got a deal!  No cuts to Social Security or Medicare.  We good?

This happens to be great news for someone with my political leanings, of course, because my oft-disappointed feelings about the Democratic Party are nothing compared to my paralyzing fear of what Republicans will soon do to end our constitutional democracy.  Even setting politics aside, however, this is great news substantively, because I happen to have spent a great deal of my professional life debunking baseless conservative attacks on Medicare and especially Social Security.  And here I do mean "conservative" to include more than Republicans, as I will explain below.

It has been barely a week since Biden's big moment, and the backlash from the budget hawks (or, as Paul Krugman calls them, the Very Serious People, or VSPs) has already begun.  Democrats and Republicans, in an unplanned way, have agreed to leave in place two of the most successful pieces of social legislation in human history (perhaps not as transformative as child labor laws or the 5-day work week, but that is pretty good company).  The VSPs' response: This cannot stand!

In the face of Biden's success, what is a good anti-government fiscal scold to do?  Present their political preferences as facts, and count on elite institutions like The New York Times to lead the way.  What could be more bipartisan than to have the supposedly liberal Times front for an attack on the middle class?  How about passing it off as neutral reporting rather than opinion?  They can do that, too.

I teach a graduate tax law course every year called "Deferred Compensation," which should probably be called simply "Retirement."  The standard fare for such a course is to discuss things like 401(k) and 403(b) accounts, IRA's, and so on.  I cover all of that, but because so many Americans have either no money or very little money in such private accounts, the fact is that Social Security is the funding system on which most people will rely almost exclusively in retirement.

I therefore spend a good chunk of the course discussing Social Security's "old-age" retirement benefits (only briefly mentioning the other two key elements of the system, survivors' benefits and disability income) because so many of my students have been fed a constant series of lies about how Social Security "won't be there for you when you retire," or will "go bankrupt," or is "insolvent," or the usual run of lies and half-truths that have become part of the nation's political wallpaper.  If my students will be advising future clients about their strategies for supplementing Social Security with individual saving, they need to know the truth about Social Security.

And the truth about Social Security is that, as currently constructed, it will be here forever.  It is fundamentally financially stable into the short-, medium-, and long-term future.  While a few politicians are somewhat careful not to say directly that it will collapse and go away, even they use apocalyptic language.  The only way that Social Security will not be there for future generations, however, is if we allow politicians to take it away from them.  That is why last week's impromptu kumbaya moment (if kumbaya moments can include hoots and taunts) at the State of the Union was so significant, and it is why the anti-government types need to continue to lie to people.

As I recounted to my students at one point last week, I once had a conversation with a think-tank type who wants to get rid of Social Security.  She admitted that the system is not bankrupt or anything like that, but she said (with a bizarrely sunny smile): "Well, we've already convinced young people that Social Security won't be there for them, so we should go ahead and do it, because they've been primed for it to happen."  Why disappoint young people's expectation of being harmed?!

I will not spend any time in this column re-explaining why Social Security is not doomed, but interested readers can find a short version in any of my nearly-annual columns on this topic on Verdict (2022 version here).  I will, however, offer the bottom line, based on the latest annual Trustees' report, which updates 75-year forecasts of the system's financial trajectory:

If the worst-case scenario plays out in the near term (which means weak economic growth and unfavorable demographic changes), then the average annual retirement benefit (expressed in 2022 dollars, that is, adjusting for inflation) for American retirees will be $13,400.

If economic and demographic factors are unfavorable but not as unfavorable as the worst-case scenario, average annual benefits will be $14,900

If those variables take a reasonable (but in no way "rosy") path, average annual benefits will be $18,600.

For all three of those statements, it is accurate to add "in perpetuity" at the end of each sentence.  Again, here I am not getting into the weeds of how it will be determined which path we are on, or even whether it would be legally permissible to pay anything less than the highest of those three amounts.  I am saying that, even under the worst-case forecast that the (very pessimistic) forecasters are eager to publish, the average retiree will receive a bit more than $1100 per month, and that number could be 11 or even 39 percent higher.

To be clear, none of those numbers are particularly generous.  When anti-government con artists talk about "greedy geezers" who are trying to feather their nests with supposedly cushy benefits, we should remind ourselves of those numbers -- and bear in mind that, especially for all but the top 10 percent of workers, that is likely to be people's entire post-retirement income.

So it is bad that the benefits are so low.  It is true, however, that none of those numbers is zero, or anything close to that.  Even if things go very badly, Social Security will still be there, long after the Trust Fund balance is used up (as planned), and the system will be self-sustaining literally forever.

As I wrote above, however, there are a lot of people who want to make Social Security go away, either directly and immediately (Utah Senator Mike Lee is on the record saying as much, although he is now predictably saying that he was "taken out of context"), or by cutting it, partially privatizing it, or turning it into a dreaded "welfare program" that would lose political support.  And again, soften up young people by saying that it will never be there for them at all.

Notably, in defending his prior attacks on Social Security (which, to be clear, saw him saying that he would go to Washington with with a desire to "pull it up by the roots and get rid of it"), Lee tried to change the subject, saying that Biden is "using this as a diversion from the real issue: that our mounting national debt jeopardizes our ability to fund literally everything the federal govenrment does, including those same programs he now accuses us of trying to dismantle."

Again, it is very clear who is winning the political battle right now, and it is not Mike Lee.  Therefore, he wants us to think about the "real issue" of "mounting national debt."  He is quite wrong that the path of the national debt jeopardizes Social Security itself, because as I noted above, even the worst-case scenario has Social Security paying average benefits of $13,400 per year (adjusted for inflation) forever.

Lee, however, is hardly alone in trying to steer the debate away from Social Security and toward government debt, and to suggest that Social Security is the problem.  Indeed, as I alluded to above, The New York Times is all in on using debt-related scare tactics to drive the political debate toward "entitlement reform" -- aka cutting Social Security and Medicare.

I have had some fun in recent months calling out columns by Times business columnist Jim Tankersley, both when he writes alone (which I ridiculed here) and with his colleague Alan Rappeport (which I ridiculed here).  Today, Tankersley was back at it, in "As Lawmakers Spar Over Social Security, Its Costs Are Rising Fast."  There, he tries mightily to scare-monger the issue by saying that "Mr. Biden has effectively steered a debate about fiscal responsibility away from two cherished safety-net programs for seniors, just as those plans are poised for a decade of rapid spending growth."

Notably, what Tankersley calls "a debate about fiscal responsibility" is nothing more than fiscal conservatives pretending that, to mention one particularly silly example that he and Rappeport pushed last fall, somehow $31 trillion of gross federal debt is a meaningful milestone.  Again, this is not on the op-ed page.  The article says that Biden has pushed us away from debating the deadly serious issue of fiscal responsibility, and Tankersley wants us to be concerned.

Deploying his typical move, Tankersley presents non-news as news.  The fact is that Social Security is supposed to be running annual deficits for the next few decades.  Why?  Because it ran surpluses for three and a half decades, and it is now drawing down its accumulated excess.  Social Security is, for better or worse, treated as a separate program with a dedicated revenue source, and that revenue source is sufficient to keep the system running under any of the three scenarios that I summarized above.

It is easy to make the draw-down phase look bad, with Tankersely writing that "a wave of baby boomers [is] reaching retirement age and beginning to tap the programs, which provide guaranteed income and health insurance from the time benefits are claimed until death."  Sound scary enough for you?  The Boomers are all getting old and will expect to be paid until death.

Again, however, how is it news that the Baby Boom exists or that it is aging?  Tankersley tries to find a news hook by saying that the Congressional Budget Office is about to update its forecasts of government finances, but that is a matter of ongoing adjustments in long-term predictions.  The point is that Social Security can continue to work, and the rest of the federal budget is irrelevant for that purposd.  For that matter, Medicare is expensive because our health care system is expensive, not because we are being too generous with elder care.

But again, Tankersley is set on the idea that this is all bad: "In its last wave of forecasts, in May, the budget office predicted Social Security spending would grow by two-thirds over the coming decade. That’s more than double the expected growth rate for spending on the military and on domestic programs like education and environmental protection."  Well, yes, because Social Security is in the phase where it is making good on the money that Boomers overpaid into the system during their working lives.  (And by "overpaid," I mean taxes far in excess of what was necessary to fund benefits at the time.)

To emphasize his supposedly high-minded position, Tankersley quotes from an infamous deficit scold: "The sober warnings from the experts is quite a contrast to the gleeful cheers from bipartisan policymakers at the State of the Union for doing nothing."  Yes, "the experts" -- all of them! -- are worried that we will do nothing.  Somehow, however, the source manages not to mention that doing nothing would leave Social Security chugging along forever.

Let me repeat once again that I do not want us to do nothing.  I want to increase benefits for Social Security, but I say that not as part of a we've-gotta-do-something-now-or-else public relations scam but simply to allow our retirement system to make people's lives a bit less uncomfortable than it currently does.  But when one is paid by The New York Times to write a string of articles that all present anti-government debt hawkery as the highest form of moral rectitude, it is apparently necessary to misrepresent reality and scare people.  In this case, the politicians have it right, and the supposed experts are simply working from muscle memory.

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