Beginning in 1940 when the first Social Security retirement check was mailed out to Ida Fuller, a retired legal secretary living in Brattleboro, Vermont, and continuing to this day, no public policy has done more to protect the financial security and dignity of Americans. No public policy has charged our elected leaders with greater moral responsibility -- the obligation to steward this institution built with the hard work and financial contributions of generations of working Americans.
That's why the long-term financial health of Social Security is so carefully monitored. And why the annual report on the long-term financial outlook of Social Security will be released in the next few days, just as it has been every year since 1941, by the Trustees of our Social Security system.
The close monitoring should provide confidence to the American people. It provides policymakers an early warning if shortfalls are projected, so they can be addressed calmly and carefully.
In recent years, though, the Trustees Report has been used by those who want to chip away at or radically alter Social Security protections. By influencing the reporting of the Trustees reports, these opponents work to shake confidence in this institution upon which one-third of Americans rely for virtually all - and two-thirds for half or more - of their income in retirement.
So journalists, and everyone else, be prepared. The release of this year's report is imminent, reportedly this Friday. Get ready for a great deal of misinformation and misinterpretation (a.k.a., baloney) about Social Security's financial outlook with the desired impact of pressuring cuts in the program's modest benefits.
Take a look at Columbia Journalism Review's "Report Card on Social Security Coverage" which provides an account of flawed reporting of last year's Report. And to better inform this year's coverage, please note the following:
•The most important take-away from the 2013 Social Security Trustees Report will be that Social Security works for the American people.
•Social Security has a large and growing surplus (The Medicare reports released simultaneously are likely to reveal a healthier Medicare as well, thanks to the recent slowdown in health care costs.) The program's cumulative surplus will be projected to be roughly $2.8 trillion in 2013, and to continue to grow until it reaches about $3 trillion around 2020.
•Without any Congressional action to increase its revenue or cut its benefits, Social Security will continue to pay all benefits to America's eligible working families for around two decades. With only modest increases in revenue, policymakers could keep Social Security paying benefits for the next century and beyond.
•In recent years, some erroneously claim that Social Security is paying out more money in benefits than it is collecting in income. By law, this is impossible. Social Security can only pay benefits if it has sufficient income to cover the costs. This inaccurate claim disregards two of Social Security's major sources of income - interest earned on Social Security's U.S. Treasury bond holdings, and income taxes on the Social Security benefits of those with higher incomes - and counts only income generated by payroll contributions. When income from all its dedicated sources is counted, Social Security's 2013 revenues will surpass its expenses, by roughly $40 billion.
Because more and more reporters have caught onto that trick, opponents of Social Security may use a new ploy to scare Americans. Watch out for press releases that the Disability Insurance (DI) component of Social Security faces an imminent, cataclysmic shortfall. Understand that the projected shortfall is nothing new, not a surprise, nor a matter of great concern. This was projected last year as well. Indeed, Congress took action in 1994, knowing that it would have to take action again around 2015 or 2016.
The DI shortfall can be easily addressed unless opponents of Social Security choose to engage in hostage-taking. Congress can and should reallocate revenue between the OASI and the DI trust fund as it has done 11 times in the past. The long history of transfers between the Social Security trust funds reflects policymakers' traditional and proper treatment of the old age, survivors, and disability programs as one entity, because they are so intertwined and their income is from the same sources. The DI trust fund is experiencing extra costs resulting merely from raising the retirement age from 65 to 66 and soon to 67. By law, the Social Security benefits of people with disabilities are automatically paid for from the old age trust fund when they reach the full retirement age. Prior to that, they are paid from the disability trust fund. For no reason other than that Congress increased the full retirement age, funds are flowing more rapidly from the DI trust fund, yet another reason why reallocation of the percentage of payroll contributions going to the two funds is appropriate.
Despite scary, inaccurate reports to the contrary, Social Security is structurally sound and fully affordable. Journalists have an opportunity to correct much misunderstanding and confusion about Social Security in general, and about the DI program in particular. As stated above, estimates of the Disability Insurance trust fund's forthcoming shortfall are not new. There are several obvious, well-understood, but underreported reasons that costs have grown, necessitating the reallocation. In addition to the legislated change in the full retirement age, they include:
•Baby Boomers, now 48 to 67, are aging. Most work disabilities appear later in life. Since 1990, there has been a 77% increase in the number of persons ages 45 to 64. Workers are twice as likely to become severely disabled at age 50 as at age 40, and twice as likely to become severely disabled at age 60 as at age 50.
•The labor force participation of women has grown. Women experience higher rates of disability than men. Women's labor force participation jumped starting in the 1970s and 1980s, Consequently, the number of women receiving Social Security disability benefits, earned through work, has risen steadily since then, is roughly equal to the number of men and is now plateauing as the first generation of women in covered employment age into their 50s and 60s.
•The population of the United States has grown by 26% since 1990, from about 249 million in 1990 to 315 million in 2012. Independent of aging baby boomers and the increased labor force participation of women, this trend also swelled the numbers of people eligible for Disability Insurance benefits.
To restore public confidence, Social Security's projected shortfall should be addressed sooner rather than later, but it must be addressed properly and it must be addressed not in a panic but in the sunshine, where the falsehoods can be corrected. The shortfall should not be addressed by cutting Social Security's extremely modest benefits, averaging just $15,200 for a retiree in April 2013.
The modest shortfall, still decades away, projected in the Social Security trustees reports should be addressed by increasing Social Security's dedicated revenue. Making millionaires and billionaires, who currently only contribute to Social Security on wages up to $113,700, pay their fair share can easily eliminate the projected shortfall. Simply eliminating the so-called cap will close, depending on how structured, roughly 85 to 90 percent of the projected funding gap. This is what poll after poll reveals the overwhelming majority of Americans want. This is also the right policy for the nation.
Much more attention needs to be paid to a serious retirement income crisis facing working Americans. The crisis is not in our Social Security system. It's in the rest of the retirement system. Traditional pension protections are greatly diminished, housing is down, health care costs are up, and 401k plans are unreliable. The results are not pretty. Over half (53 percent) of working-age American households will not be able to maintain their standard of living in old age, and this figure rises to roughly two-thirds when health and long-term care costs are also considered.
Social Security is the solution to the retirement income crisis. Not only is it the most sound, secure way to ensure dignity in old age, it is just about the only retirement security left that we can count on. That's why a growing number of Democrats, Republicans and Independents are saying we should build on what works. Why Red and Purple state senators like Mark Begich (D-AK) and Tom Harkin (D-IA) have introduced bills that would expand Social Security benefits; why the centrist New America Foundation has proposed increasing Social Security benefits by $11,669 per year. They, like us, believe it's time to expand, not cut, Social Security!
Social Security is not a right vs. left issue. It is a Main Street vs. elites issue. Many elites in Washington--Democrats and Republicans--have not yet woken up to the reality that their constituents care far more about retiring in dignity than cutting government spending to give more tax cuts to large corporations and the rich. And they care more about maintaining disability and life insurance protections for working Americans, their young children and spouses...
Maintaining or indeed increasing Social Security's modest benefits represents not only the will of the American people, but the best policy as well. And it builds on and reinforces widely shared American values - honoring parents, caring for our families, neighbors and selves, personal responsibility, a fair return to hard work and respect for the dignity of every person.
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Nancy Altman, Co-Chair, Strengthen Social Security Coalition, has a 35-year background in the areas of Social Security and private pensions. Before she became co-chair of the coalition, she taught at Harvard University. Prior to that, she served as Alan Greenspan's assistant in his position as chairman of the so-called Greenspan commission, the bipartisan National Commission on Social Security Reform whose recommendations formed the basis of the Social Security Amendments of 1983. She is the author of The Battle for Social Security: From FDR's Vision to Bush's Gamble (John Wiley & Sons, 2005). njalt@aol.com 301-873-2610
Eric Kingson, Co-Chair, Strengthen Social Security Coalition, professor of social work at Syracuse University, served as policy advisor to two presidential commissions - the 1982-1983 National Commission on Social Security Reform and the 1994 Bipartisan Commission on Entitlement and Tax Reform. Primary author of Social Security and Medicare: A Policy Primer (Greenwood, 1993) and co-editor of Social Security in the 21st Century (Oxford University Press, 1999), his scholarship examines the politics and economics of population aging, retirement, Social Security, and justice across generations. erkingso@syr.edu 315-374-8338