U.S. Rep. David Cicilline (D-RI) is right: the share of wages in the economy covered by Social Security has declined in recent decades from 90 to 83 percent due to rising wage inequality. Moreover, raising the Social Security tax cap (currently $113,700) to its historic level would go far in shoring up the program's long-term finances.
On May 13, 2013 on WPRI's "Newsmakers," Rep. Cicilline responded to a question about how to improve Social Security's finances by stating:
Social Security used to be a tax which was assessed on approximately 90 percent of the income generated in this country, which was sort of where it has been historically. It currently collects taxes on about 83 percent of wages earned, because the cap ... only captures 83 percent of earnings, because there's been such a growth of income at the very top.
PolitiFact Rhode Island judged the Congressman's statement to be "Mostly False."
Let's consider the facts. When Social Security was originally introduced by Congress, the cap to its contribution base was set at a level that covered more than 90 percent of earnings in the economy - 92 percent in 1937, the first year that Social Security contributions were collected. In the decades that followed, the share of covered earnings declined into the 70-80 percent range -- not by design, but by the simple operation of wage growth and inflation. In the 1977 Social Security Amendments, Congress consciously decided that the cap should again cover 90 percent of wages, and took explicit steps to restore and maintain it at that historic level.
The House Ways and Means Committee report accompanying the 1977 Amendments explained: The "... bill provides for increasing the contribution and benefit base... to a level where about 90 percent of all payroll in covered employment would be taxable for social security purposes." The Social Security Bulletin article reporting on the 1977 Amendments expressed Congress's legislative intent similarly: "In 1981 and after, about 91 percent of all payroll in covered employment will be taxable for social security purposes. ... In comparison, the ... base provided for in the original social security law taxed nearly 93 percent of all payroll in 1938 ..." In the 1977 Amendments, Congress not only restored the cap to its historic level; to ensure that the cap would remain around the 90 percent level going forward, it also automatically indexed the new cap to growth in average wages.
However, despite Congress' legislative intent, the share of earnings in the economy covered by the cap has declined from 90 percent in 1983 to about 83 percent today, due to the fact that since 1983, income above the cap has grown much faster than income below the cap. The nation's top experts on Social Security -- e.g. Nancy Altman, Eric Kingson, Henry Aaron, Virginia Reno, Peter Orszag and Peter Diamond, and many others -- agree on these facts.
In short, Rep. Cicilline's statement was not inaccurate or unfounded; rather, it demonstrated an impressive command of the issue.
Politifact could find nothing untrue in what the Congressman said. Both the percentages he cited and his larger argument were correct. With an apparent zeal to find something to criticize, they added their own assumption to the Congressman's statement of fact. They assume that in his statement that Social Security used to be a tax which was assessed on "approximately 90 percent of the income generated in this country... which was sort of where it has been historically," he was stating that the share of covered wages has averaged 90 percent from 1937 to the present. That is the worst of bootstrap arguments, the opposite of correcting the record: claim someone says something he did not, and then find the misinterpretation to be false.
The Congressman is completely correct that in the two key moments in Social Security's history when Congress acted to consciously set the cap, it chose to set it just above 90 percent of earnings. His statement was one hundred percent correct. Rather than misinterpreting his words, he should be congratulated -- certainly given the benefit of the doubt -- for having such a keen understanding of the issue that he could respond to a question in a live interview so thoughtfully.
PolitiFact has a reputation for misunderstanding Social Security, for example in their judgment of Rep. Mark Pocan's statement that Social Security doesn't add to the deficit as "Mostly False." Experts have had to correct PolitiFact on this issue multiple times, as for example Nancy Altman and Stephen Gorin did last December. Members of Congress have had to fact-check PolitiFact on this issue as well. Moreover, PolitiFact has been called out numerous times for judging factually true statements to be less than fully true on the basis of interpretations and assumptions that PolitiFact's staff themselves make. Media Matters, Paul Krugman, and others have called PolitiFact out for this, and Rachel Maddow has found their malfeasance so grave that she argues that by calling themselves a fact-checking organization, PolitiFact is undermining the definition of the word "fact" in the English language.
PolitiFact's judgment of Rep. Cicilline's statement as "Mostly False" demonstrates a lack of understanding of Social Security that would preclude most journalists from presuming to judge the truth of others' statements on the issue. Rep. Cicilline's response was insightful and accurate. It reflected a profound understanding of Social Security's history, the legislative intent behind the program, and the causes of its long-term shortfall. Though just beginning his second term in Congress, the Congressman has established himself as a respected leader on Social Security policy.
The important thing is that Rep. Cicilline stands with the vast majority of the American people, and is leading the charge with a House Resolution already signed by 100 members that rejects the chained CPI benefit cut.
Take a moment to thank Rep. David Cicilline by contacting your Representative and asking them to join his resolution and reject the chained CPI benefit cut.