There's a great deal of alarmist talk these days about the fact that Social Security won't be adding to its surplus this year. Instead it will call in some interest payments (and possibly other monies, too) on the money Uncle Sam borrowed from its fund. (When a rich person retires on interest income they're called "lucky" or "successful." When the rest of us do -- however indirectly and slightly -- it's called a "crisis.")
Those who claim to be so gravely concerned about the financial stability of Social Security should consider this: If our government had put ten million unemployed Americans back to work, Social Security would have added to its surplus this year.
Since our professors trained us to always "show our work," here are the (admittedly back-on-the-envelope) calculations used to reach that conclusion:
a) An estimated 156 million people had earnings covered by Social Security and paid payroll taxes in 2010.
b) Net contributions plus taxable employee benefits totaled $689 billion.
c) That comes to an average of $4,416.67 in revenue collected per covered worker.
d) Multiplying the average contribution by 10,000,000 = $44 billion and change
e) This year's "shortfall" is $41 billion
(figures from the 2010 Annual Social Security Trustees Report)
Ten million new workers would have left us with a net surplus for the year of slightly over $3 billion. So why aren't those who profess such concern about Social Security's fiscal soundness pushing for more stimulus spending? Could it be because their real concern isn't protecting Social Security?
Some will say that putting ten million people back to work isn't politically or economically feasible, but more than eight million people lost their jobs because of the recession. Their contributions would have added more than $35 billion in income this year, as well as a similar amount last year, leaving Social Security with even more of a surplus than it has today. That wouldn't have prevented alarmists like Allan Sloan from using deceptive arguments -- no matter how big the surplus is, it's "funny money" to them -- but it certainly would've made it more difficult to create a false sense of emergency.
So why are these self-proclaimed protectors of Social Security trying to "fix" it by cutting benefits, instead of looking to those who caused the real problem in the first place? Because their real end-game is deficit reduction, and an aura of "crisis" around Social Security serves their ultimate objective: Using Social Security funds, either directly or indirectly, to reduce the deficit. Stimulus spending initiatives don't serve their true purposes.
If they were really as concerned about Social Security as they say, they wouldn't keep placing benefit reduction moves at the top of their "to do" list. But honesty wouldn't be the best policy for them, at least politically. "Let's save Social Security" probably plays a little better in focus groups than their real goal: "We want to use a trust fund for retirees to reduce a deficit caused by tax cuts for the wealthy and other unsound political decisions."
The next time someone says they want to cut Social Security because they're "concerned" about it, why not suggest we put some people back to work instead?
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Richard (RJ) Eskow, a consultant and writer (and former insurance/finance executive), is a Senior Fellow with the Campaign for America's Future. This post was produced as part of the Strengthen Social Security campaign. Richard also blogs at A Night Light.
He can be reached at "rjeskow@ourfuture.org."
Website: Eskow and Associates