Presidential candidate Barack Obama got himself into hot water
with some in his own party when he recently said that Social
Security faces a "crisis."
Senator Obama's problem is that the nation's most popular social
safety net program is actually in pretty good shape.
"The whole problem is exaggerated," says Mark Weisbrot,
codirector of the left-leaning Center for Economic and Policy
Research (CEPR) in Washington. "Nobody needs to talk about it."
The Trustees of the Social Security system, in their report last
spring, calculated that the system's income would be inadequate to
pay the full benefits promised to seniors in 2042. By then, 35 years
hence, many baby boomers will be gone. For those still living, the
payroll revenues that provide the basic income for the system will
be sufficient to pay 75 percent of promised benefits. The next
generation of retirees will also get 75 percent - not zero, as so
many of them believe because of the false talk about the system
being "bankrupt." And unless the nation's productivity stalls for
decades (Social Security benefits are linked to wage levels), that
75 percent will have a buying power perhaps 30 percent greater than
the Social Security benefits received by seniors today.
An analysis of the Congressional Budget Office puts the shortfall
- not bankruptcy - at 2046, a few years later, when the Social
Security Trust Fund runs out of the Treasury bonds it has been
stockpiling because current payroll revenues each year exceed
A professional actuary, David Langer in New York, sees a brighter
picture. He figures Social Security's finances are actuarially sound
and able to pay full benefits for the next 75 years.
Mr. Langer reaches his conclusion after examining a decade's
worth of 75-year projections made by the trustees. He found that the
most optimistic of the three annual projections has been most
accurate. Those more cheerful predictions show Social Security
completely sound, with even a small surplus at the end of 75 years.
"There is no problem, actuarially," Langer says.
He blames conservatives and their think tanks - including the
CATO Institute and Heritage Foundation - for a long "propaganda
campaign" that has foisted on the public the idea that Social
Security is in deep trouble. He also criticizes the media for
accepting the gloomy view of these critics, many of whom advocate
privatizing Social Security.
The Trustees' middle projection, which the Trustees see as most
likely, indicates that Social Security's financial shortfall over 75
years amounts to $4. …