New York Times’ ‘Solution’ to Social Security Cuts Makes No Sense

It’s hard to improve on economist and FAIR contributor Dean Baker’s observation that corporate media’s calls for cuts to programs for the elderly under the neutral-sounding guise of “reform” are about as predictable as the sunrise. As illustrated by the New York Times’ alarmist 1,581 word report (6/12/19) by Jeff Sommer, headlined “Social Security Is Facing Its First Real Shortfall in Decades,” another favorite media euphemism for cuts to Social Security is “solution.”

And not just any “solution”; it has to be “bipartisan,” too, in order to beat back the caricature of crazy leftists intent on bankrupting the country with their fiscal irresponsibility, even though there is no evidence that bipartisanship in itself produces better legislation (FAIR.org, 2/3/09).

Sounding the alarm of a “slow-moving crisis,” the Times warned readers that the most successful anti-poverty program in the United States is going to start drawing on its $2.9 trillion trust fund next year—for the first time since 1982—in order to keep paying out full benefits until 2034 or 2035. If nothing is done, the Times projects that benefits after that point would be cut by an average of 20 percent, and up to 25 percent in later years, because of the “long-known basic math problem” of insufficient numbers of younger people to replace the thousands of Baby Boomers retiring each day. (Actually, Social Security’s long-term problems have relatively little to do with the Baby Boom, most of whom will be dead by 2040.)

The Times declared the need for a “political solution,” and suggested that the “bipartisan effort” by Republican President Ronald Reagan and Democratic House Speaker Tip O’Neill in the 1980s—which it framed it as something that was “needed” to overcome a similar “crisis” in their time, after Reagan’s budget director’s proposal for immediate cuts to retiree benefits backfired—“gives some clues for a possible solution today.”

In case readers don’t get the hint that bipartisan cuts to Social Security are necessary, the report ended with quotes from John Cogan—described as “a professor of public policy at Stanford,” not as a senior fellow at the right-wing Hoover Institute—talking about how impending benefit cuts will make a bipartisan compromise “possible,” and a former Social Security trustee claiming that we “undoubtedly” need a “combination of increased taxes and reduced benefits,” because otherwise the “eventual solution will be much more painful.”

Notice that even though the Times mentions that Democrats in Congress have a plan to expand benefits through higher taxes on the wealthy, which the chief actuary of Social Security says would “eliminate the program’s financial shortfall,” that is never presented as a “solution”; that word is reserved for things that would be “painful” or “unpalatable but inevitable” for Social Security beneficiaries, like “reduced benefits” or slowing the growth in “real benefits promised to future recipients.”

So what was the great “solution” in the 1980s? According to the Times, it was to reduce benefits “in more subtle ways” by gradually raising the retirement age from 65 to the current 66 (and eventually 67), while raising taxes and using the surpluses to create the multi-trillion dollar trust fund.

However, as FAIR’s Jim Naureckas (Extra!, 12/12) pointed out, it’s false to say that the Reagan/O’Neill tweak “raised the retirement age,” because then and now people are able to retire at 62.  Social Security benefits increase the longer you delay retirement, up to the age of 70; this is still true, but as a result of Reagan and O’Neill, the amount you get at any age is less than it was before, including the maximum benefit at 70. The accurate way to describe this is not “raising the retirement age,” but “cutting Social Security benefits.”

This is ironic, because in its recent report, the Times noted that benefit cuts would be “devastating” for the half of retired Americans who rely on Social Security for most of their income, and especially for poor and African-American retirees, and called for a “political solution” to avoid forcing these people to make “hard choices” between “delaying retirement” or “surviving on less.”

The Times report especially failed to inform readers on the remarkable injustice of cutting Social Security benefits, in view of where the funding gap came from. Although the Times correctly notes that Social Security benefits are progressive, giving more benefits to those with greater need, it doesn’t note that the payroll taxes which finance Social Security are regressive, because every working American pays the same percentage up to $132,900, while income above that amount is exempt from further payroll taxes (Guardian, 4/15/13). This regressive aspect, coupled with the rise in income inequality over the past four or five decades, explains a significant portion of the Social Security shortfall (Center for American Progress, 2/10/15).

Any accounting of the current shortfall that doesn’t include how the Great Recession exacerbated the issue through millions of unemployed workers unable to provide payroll taxes, along with lower-paying jobs replacing higher-paying ones, caused by financial deregulation, remains incomplete.

Economist Richard Wolff (Guardian, 11/4/13) noted that austerity cuts to entitlement programs like Social Security after an economic crisis amount to a great “shell game.” Even though workers had to pay excess payroll taxes for decades to create the surpluses that form the Social Security trust fund, the same workers who contributed more than necessary are being asked to receive less than what was promised to them, in order to pay off the massive debt-fueled bailouts and economic stimulus cynically being exploited to attack Social Security, despite the self-funded program having no relevance to the deficit or national debt (Truthout, 5/7/13).

Setting aside the media’s pattern of reporting on the Social Security Trustees’ annual report in the gravest terms possible, despite this year’s report containing better news than last year’s, there are real solutions that don’t involve cutting benefits.

One popular idea is to scrap the income cap on payroll taxes, as we already did with Medicare, so that the wealthy pay the same amount of their earned income toward Social Security as anyone else. The Congressional Research Service found that eliminating the cap and maintaining the same maximum benefit would by itself eliminate 83 percent of the current shortfall (Forbes, 10/25/18).

Sound like a “solution,” or most of one? The New York Times might call it that—if only it were more painful to retired workers.