Today, a coalition of 50 organizations dedicated to ensuring no benefit cuts to Social Security launched in Washington. The coalition, including top labor unions, progressive groups like MoveOn.org and Democracy for America, and a host of others, released seven principles that will guide their policy prescriptions:
1) Social Security did not cause the federal deficit; its benefits should not be cut to reduce the deficit.
2) Social Security should not be privatized in whole or in part.
3) Social Security should not be means-tested.
4) Congress should act in the coming few years to close Social Security’s funding gap by requiring those who are most able to afford it to pay somewhat more.
5) Social Security’s retirement age, already scheduled to increase from 65 to 67, should not be raised further.
6) Social Security’s benefits should not be reduced, including by changes to the COLA or the benefit formula.
7) Social Security’s benefits should be increased for those who are most disadvantaged.
Members of the coalition gave an aggressive presentation on their opposition to benefit cuts or raising the retirement age (which AFL-CIO President Rich Trumka called a benefit cut today) at their National Press Club launch. And to back this up, coalition member MoveOn.org today released a debunking of five Social Security myths. I’ll put the full text at the end, but basically, they take on the ideas that: 1) Socia Security is bankrupt, 2) the retirement age must go up because of increased life expectancy, 3) only benefit cuts can solve the long-term funding problem, 4) the Social Security Trust Fund is full of “worthless” IOUs, and 5) Social Security adds to the deficit. Needless to say, these are all ridiculous, but even progressives who don’t pay careful attention to the debate could end up parroting them. So the MoveOn action could be helpful in that regard.
A Gallup poll released today shows that people actually want to subject all wages to the payroll tax as a way to protect Social Security. . . . This would completely eliminate the long-term funding imbalance and allow the program to pay out higher benefits. Just 39% supported raising the retirement age as a solution, and at her weekly press conference House Speaker Nancy Pelosi announced her opposition to that idea:
The fact is, though, that I don’t think, and I have said this over and over, that we should be balancing the budget by raising the retirement age of Social Security. I oppose that. There should be two separate conversations. What are we doing to keep Social Security solvent? Let’s discuss that. What are we doing to balance the budget? But let’s not say that we should balance the budget by making the Social Security age — raising the Social Security age. What is that for? To pay for tax cuts for the wealthy that went before, now we have to raise the retirement age? Is that for wars, endless wars, unpaid for wars; now we have to raise the retirement age? These are two separate subjects. The solvency of Social Security, that is one subject. Let’s discuss that. Reducing the deficit, that is a different subject.
A coalition member described to me a partial strategy for the coalition, mainly to increase awareness of the deficit commission’s plans, and increase the pressure on members of Congress to oppose any cuts to the program. The August recess and the town halls could play a major role in that, as well as the November elections.
The full set of myths and facts are on the flip.
Myth #1: Social Security is going broke.
Reality: There is no Social Security crisis. By 2023, Social Security will have a $4.6 trillion surplus (yes, trillion with a ‘T’). It can pay out all scheduled benefits for the next quarter-century with no changes whatsoever. After 2037, it’ll still be able to pay out 75% of scheduled benefits—and again, that’s without any changes. The program started preparing for the Baby Boomers’ retirement decades ago. Anyone who insists Social Security is broke probably wants to break it themselves.
Myth #2: We have to raise the retirement age because people are living longer.
Reality: This is a red-herring to trick you into agreeing to benefit cuts. Retirees are living about the same amount of time as they were in the 1930s. The reason average life expectancy is higher is mostly because many fewer people die as children than they did 70 years ago. What’s more, what gains there have been are distributed very unevenly—since 1972, life expectancy increased by 6.5 years for workers in the top half of the income brackets, but by less than 2 years for those in the bottom half. But those intent on cutting Social Security love this argument because raising the retirement age is the same as an across-the-board benefit cut.
Myth #3: Benefit cuts are the only way to fix Social Security.
Reality: Social Security doesn’t need to be fixed. But if we want to strengthen it, here’s a better way: Make the rich pay their fair share. If the very rich paid taxes on all of their income, Social Security would be sustainable for decades to come. Right now, high earners only pay Social Security taxes on the first $106,000 of their income. But conservatives insist benefit cuts are the only way because they want to protect the super-rich from paying their fair share.
Myth #4: The Social Security Trust Fund has been raided and is full of IOUs
Reality: Not even close to true. The Social Security Trust Fund isn’t full of IOUs, it’s full of U.S. Treasury Bonds. And those bonds are backed by the full faith and credit of the United States. The reason Social Security holds only treasury bonds is the same reason many Americans do: The federal government has never missed a single interest payment on its debts. President Bush wanted to put Social Security funds in the stock market—which would have been disastrous—but luckily, he failed. So the trillions of dollars in the Social Security Trust Fund, which are separate from the regular budget, are as safe as can be.
Myth #5: Social Security adds to the deficit
Reality: It’s not just wrong—it’s impossible! By law, Social Security’s funds are separate from the budget, and it must pay its own way. That means that Social Security can’t add one penny to the deficit.