Dean Baker -- The Macho Men Are Wrong on Social Security

[Donnachaidh]

http://www.counterpunch.org/baker04012011.html

The accepted wisdom in Washington policy circles is that we have to cut Social Security if we are serious about dealing with the deficit. Before anyone rushes to shave the benefits of retirees it might be worth asking why.
By now, just about everyone has seen the charts touted by the deficit hawks showing that the cost of Social Security, Medicare, and Medicaid is projected to go through the roof in the decades ahead, while the cost of everything else is more or less under control. This looks very ominous. The neat trick is that if Social Security is pulled out from the category with Medicare and Medicaid, and instead placed in the category with everything else, the chart looks almost exactly the same.

The real story is that the cost of Medicare and Medicaid are projected to go through the roof because the cost of health care is projected to go through the roof. We can put in any program – veterans benefits, Head Start, foreign aid – together with Medicare and Medicaid and show the cost of these three programs together going through the roof.

Lumping in Social Security with Medicare and Medicaid conceals the reality that the real long-term budget problem is a health care cost problem. The United States already pays more than twice as much per person for its health care as other wealthy countries. It gets little obvious benefit for this additional expense. Per person health care costs in the United States are projected to rise even further relative to both GDP and costs in other countries.

If these cost projections prove accurate, then it will have a devastating impact on the U.S. economy. Part of this story will be the huge deficits touted by the budget hawks since more than half of national health care spending is paid through the public sector. However this trajectory for health care costs will also have a devastating impact on the private sector as well. The cost of health care for workers was one of the big factors in the bankruptcy of General Motors and Chrysler two years ago. If health care costs continue to soar, then the burden it imposes on employers and workers will rise correspondingly.

More at the link --

[hlthe2b]

1. "Macho" Men?

More like HEAVILY SELF-COMPENSATING.... :eyes:

[dkf]

2. Do social security projections assume congress will budget funds to make up for the deficit after

The surplus is used? Or is it projecting that the outflows will decrease to whatever the inflows can cover, which I understand is 80% of what people are supposed to get.

If it does drop, then the cuts are inbuilt into the assumptions and are the reason it doesn't show much of an increase.

[xchrom]

3. Recommend

[iamtechus]

4. Ridiculous, Social Security is not a part of the budget and can have nothing to do with the deficit

The top 5 Social Security Myths

Myth #1: Social Security is going broke.

Reality: There is no Social Security crisis. By 2023, Social Security will have a $4.6 trillion surplus (yes, trillion with a ‘T’). It can pay out all scheduled benefits for the next quarter-century with no changes whatsoever.1 After 2037, it’ll still be able to pay out 75% of scheduled benefits—and again, that’s without any changes. The program started preparing for the Baby Boomers’ retirement decades ago. Anyone who insists Social Security is broke probably wants to break it themselves.

Myth #2: We have to raise the retirement age because people are living longer.

Reality: This is a red-herring to trick you into agreeing to benefit cuts. Retirees are living about the same amount of time as they were in the 1930s. The reason average life expectancy is higher is mostly because many fewer people die as children than they did 70 years ago.3 What’s more, what gains there have been are distributed very unevenly—since 1972, life expectancy increased by 6.5 years for workers in the top half of the income brackets, but by less than 2 years for those in the bottom half. But those intent on cutting Social Security love this argument because raising the retirement age is the same as an across-the-board benefit cut.

Myth #3: Benefit cuts are the only way to fix Social Security.

Reality: Social Security doesn’t need to be fixed. But if we want to strengthen it, here’s a better way: Make the rich pay their fair share. If the very rich paid taxes on all of their income, Social Security would be sustainable for decades to come. Right now, high earners only pay Social Security taxes on the first $106,000 of their income. But conservatives insist benefit cuts are the only way because they want to protect the super-rich from paying their fair share.

Myth #4: The Social Security Trust Fund has been raided and is full of IOUs

Reality: Not even close to true. The Social Security Trust Fund isn’t full of IOUs, it’s full of U.S. Treasury Bonds. And those bonds are backed by the full faith and credit of the United States. The reason Social Security holds only treasury bonds is the same reason many Americans do: The federal government has never missed a single interest payment on its debts. President Bush wanted to put Social Security funds in the stock market—which would have been disastrous—but luckily, he failed. So the trillions of dollars in the Social Security Trust Fund, which are separate from the regular budget, are as safe as can be.

Myth #5: Social Security adds to the deficit

Reality: It’s not just wrong—it’s impossible! By law, Social Security’s funds are separate from the budget, and it must pay its own way. That means that Social Security can’t add one penny to the deficit.

Defeating these myths is the first step to stopping Social Security cuts. Can you share this list now?

Sources: http://delmontpda.wordpress.com/2010/08/15/top-5-social-security-myths-debunked/

[cameozalaznick]

5. Thank you for posting this...

I finally convinced my wing nut ditto head brother that SS is not part of our budget problem because it's not part of the budget. Of course, it helped that our father, a very conservative economic professor (but not a dittohead), backed me up on it.

But someone needs to tell people like Bill Maher this fact. And any Democrat who is ever quoted anywhere needs to memorize this list.

[DirkGently]

6. Great piece.

[kentuck]

7. This story needs to be more widespread.

It is not Social Security that is the problem. It is Medicare and Medicaid and the reason it is a problem is because of the rising costs of healthcare. It needs to be put into perspective The lies and distortions are winning the debate.

[nashville_brook]

8. kickety