Undernews for Seniors
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Entitled to Know











Complete Guide to Medical Marijuana for Seniors


Percentage of U.S. adults who plan on working past retirement age: 74


Number of Americans aged 60 and older who have outstanding student loans : 2,800,000

More older Americans cohabiting

A new study involving more than 21,000 people across the country finds that dementia rates in people over age 65 fell from 11.6 percent in 2000 to 8.8 percent in 2012 -- a decline of 24 percent. CNN reports:

Social Security lifted 22 milliion out of poverty last year


Social Security lifted 21 million people out of poverty last year


22% would rather die than not have enough money for retirement


Growing longevity gap in US based on income

@SenSanders - Before Social Security was created, nearly 50% of seniors were living in poverty. Today only 9% live in poverty.

The number of people age 65 and older in the United States is expected to almost double by 2050

Average retirement age has risen three years in the past decade

Seniors turn to the right

Seniors far outvote Millennials

@SenSanders - Social Security has not contributed a dime to the deficit and has a $2.7 trillion surplus.

Growing number of Americans feel they'll have to work until they're in the 80s . . .or until they die

Seniors in the job market

For nearly two-thirds of American seniors, Social Security provides more than half of their income. For more than one-third of American seniors, it provides more than 90 percent of their income. And for one-quarter of American seniors, Social Security is their sole source of income.

This page was last updated in early 2019. For latest news see this page and this one


How an aging population is good for the world

The health costs of growing old


40% of middle class face poverty in retirement

Five myths about Social Security

Elderly bankruptcy soars

How the government can improve retirement savings

Protections for older workers being cut

Americans can't save enough for retirement

Complete Guide to Medical Marijuana for Seniors

The downside of longer life expectancy


Seniors increasingly facing foreclosures

Cooperatives for the elderly


States where seniors are happiest

Senior cohousing

Netherlands considers assisted suicide for the healthy aged

Bernie Sanders - Before Social Security was signed into law, nearly half of seniors lived in poverty. Today, the elderly poverty rate is 10%.

Social Security's actuary finds Sanders' plan would extend program for 40 years


Why an elderly lady likes cruise ships

Nation in Distress

Need for skills opening up jobs for older workers

Preventing eldercare ghettos

A 97 year old scholar describes what it's like to live in an old folks' home

Washington Post out to wreck Social Security


Social Security being garnished for student loan debt

Student loans a problem for older Americans as well

Swiss suicide assisters extend services to those not terminally ill

Social Security considering close most of its community field offices

What it's like to be in your 90s

Why old folks aren't kiling the economy

US lags behind other developed countries in Social Security

Why Social Security is good for the economy

AFL-CIO warns Democrats not to cut Social Security & Medicare

Looking like Democrats may cut Social Security and Medicare

Why Social Security doesn't have to be a victim in ther debt ceiling brawl

Obama better not stop Social Security payments

JP Morgan gives a half million to group attacking Social Security and Medicare

Happy Birthday, Social Security

Social Security is not the problem; it's the model

US seniors a hardworking bunch

Obama's screw the seniors plan

Obama deserts nearly 80 years of Democratic policy

Media ignores Senate vote against cuts in Social Security

Why 401Ks aren't what they seem

The war on entitlements

Cancer clinics are turning away thousands of Medicare patients. Blame the sequester.


According to a government report, today’s 65-year-olds can expect to live longer — to age 85, compared to 79 in 1980 — and healthier than previous generations. Deaths from heart disease and stroke have dropped almost 50 percent, which has helped to increase the average life expectancy for Americans.

Less impressive, however, is when you go back earlier. The life expectancy of a 65 year old has only gone up 8 years since 1900. For an 85 year old, it's gone up 2.7 years. Improvements in health have affected young Americans far more than older ones.

America's broke retirees

Loneliness major health problem for aged

One in ten reverse mortagaged senior in deep financial trouble

A granny flat with high tech medical and safety features

The future of old age in America

Many may have to work into 70s or 80s to afford any retirement

Nearly half of seniors will experience at least one year in or near poverty


Many may have to work into 70s or 80s to afford any retirement

Nearly half of seniors will experience at least one year in or near poverty


44 percent of Social Security recipients, 41 percent of military veterans, 43 percent of unemployment recipients, 40 percent of Medicare recipients, 43 percent of college Pell Grant recipients and 27 percent of welfare recipients all said they had never used a government social program.



The other attack on Social Security: major cuts in service

The media calls cutting Social Security "the middle"
Why Social Security really scares the pols

Four things to remember about Social Security

"Chained CPI" is just slang for cutting benefits of seniors and veterans

Why cutting Social Security is anti-black

87% want wealthy to pay more to protect Social Security

Bernie Sanders - Under the #chainedCPI, average seniors who retire at age 65 would see their Social Security benefits cut by more than $650 a year.

Why raising the age of Social Security & Medicare is bad for everyone

Pundits want to cut senior programs


How the media distorts Social Security & Medicare issues

Don't cut Social Security, double it

Can We Please Stop Pretending Obama is “Capitulating" on Social Security?

How a 'chained CPI' will cut Social Security

Social Security has nothing to do with the deficit
We didn't say that. Ronald Reagan did.

Who's behind the effort to cut Social Security & Medicare

How liberals will help cut Social Security.

Social Security is massive anti-poverty program

Why Social Security and Medicare are not going bankrupt.

Why does Social Security Administraiton require 174,000 bullets?

The Social Security Trust Fund con

How to solve Social Security's long term problem in one easy step

Pete Peterson now out to miseducate school children about Social Security & Medicare

Everyone wants to save Social Security except Washington politicians


Social Security doesn't just help seniors, it helps their survivors

The corporate plan to steal your Social Security and Medicare

How to handle Social Security right

Reality check


What we really should be doing about Social Security

How the media has twisted the Social Security issue

Florida Republicans don't want to cut Social Security, Medicare

The Washington Post's war on Social Security

Erskine Bowles wants to cut Medicare & Social Security instead of ending sweetheart tax rates for firms like his own

Big judge by judge disparities found in Social Security Administration rulings on disabilities

Republicans want your Social Security to crash with the stock market

Recovered history: The story of Social Security

Bernie Sanders’ fine plan for helping Social Security

The Social Security Trust Fund con

How to solve Social Security's long term problem in one easy step

Pete Peterson now out to miseducate school children about Social Security & Medicare

Everyone wants to save Social Security except Washington politicians


Social Security cuts & the death of the Democratic Party

AARP sells out seniors big time


The Bowles-Simpson lie on Social Security












Simpson-Bowles plan would cause a 47% increase in taxes for poorest 20%Is deficit commission guilty of criminal misconduct?

How to cut the deficit without having to listen to Simpson and Bowles any more

Top fiscal commission staffers paid by Peter Peterson groups

Simpson-Bowles want to end free admission to Washington museums








PAUL KRUGMAN, NY TIMES - Lately, Barack Obama has been saying that major action is needed to avert what he keeps calling a "crisis" in Social Security - most recently in an interview with The National Journal. Progressives who fought hard and successfully against the Bush administration's attempt to panic America into privatizing the New Deal's crown jewel are outraged, and rightly so.

But Mr. Obama's Social Security mistake was, in fact, exactly what you'd expect from a candidate who promises to transcend partisanship in an age when that's neither possible nor desirable. . .

Inside the Beltway, doomsaying about Social Security - declaring that the program as we know it can't survive the onslaught of retiring baby boomers - is regarded as a sort of badge of seriousness, a way of showing how statesmanlike and tough-minded you are.

Consider, for example, this exchange about Social Security between Chris Matthews of MSNBC and Tim Russert of NBC, on a recent edition of Mr. Matthews's program "Hardball."

Mr. Russert: "Everyone knows Social Security, as it's constructed, is not going to be in the same place it's going to be for the next generation, Democrats, Republicans, liberals, conservatives."

Mr. Matthews: "It's a bad Ponzi scheme, at this point."

Mr. Russert: "Yes."

But the "everyone" who knows that Social Security is doomed doesn't include anyone who actually understands the numbers. In fact, the whole Beltway obsession with the fiscal burden of an aging population is misguided.

As Peter Orszag, the director of the Congressional Budget Office, put it in a recent article co-authored with senior analyst Philip Ellis: "The long-term fiscal condition of the United States has been largely misdiagnosed. Despite all the attention paid to demographic challenges, such as the coming retirement of the baby-boom generation, our country's financial health will in fact be determined primarily by the growth rate of per capita health care costs.". . .

I don't believe Mr. Obama is a closet privatizer. He is, however, someone who keeps insisting that he can transcend the partisanship of our times - and in this case, that turned him into a sucker. . .


MAY 2007


DEAN BAKER, AMERICAN PROSPECT - USA Today decided to get its entry in the summer horror flicks out early, The Return of the Granny Bashers XCIV tells readers how the affluent elderly are ripping off their children and grandchildren by collecting Social Security and Medicare (ahhhhhhhhhhhhhhhhh!).

This horror story is so chock full of misleading information that it's difficult for this reviewer to know where to begin. Well let's start with the fact that median family income for households between ages 55 and 59 rose by 52 percent over the last 15 years, while median income for families between age 35 and 39 fell by 10 percent. That should make you really mad at the old folks ripping off the young. You'll no doubt get even madder when you find out that high-living old-timers have a median household income of $57,100, while the 35-39 set must struggle by on just $56,900. Is your blood boiling yet?

The main reason for the rise in the income of 55-59 group is a surge in employment rates. This has been driven by the decline in pension coverage and retiree health benefits. Many workers who would have had the option to retire in their late fifties no longer have that option today. USA Today has managed to turn reality on its head.

The older group has seen a larger increase in wealth which is almost entirely due to the housing bubble. This groups owns homes in much higher percentages than younger households and they have held homes through the growth of the bubble, so many have accumulated some equity. Of course, when the bubble bursts, this source of inequality will be largely eliminated.

Outside of their homes, these greedy semi-geezers don't have all that much. According to the Federal Reserve Board's 2004 Survey of Consumer Finance, 53 percent of households between ages 55 to 64 had less than $78,000 in financial assets. . .

At one point the article warns that Social Security and Medicare have become "a transfer of money from less affluent young people to much wealthier older people." It is true that older people tend to be wealthier than younger people in the sense that they have typically accumulated some wealth, most often in the form of a house, over a lifetime of working. That is how they avoid poverty in their retirement. The median income of the elderly is far lower than for younger households, but the article was clever enough to refer to wealth, not income.

It doesn't look like the crusade against Social Security and Medicare will end any time soon. There are clearly very powerful interests who want these programs gutted. The basic story is very simple. These are very efficient and effective programs that have guaranteed seniors a decent standard of living in their retirement. They have not made anyone rich. Furthermore, they are eminently affordable, if we fix the U.S. health care system. Of course if the political system is too corrupt to reform the health care system, then we will face enormous economic problems, one of which will be paying for Medicare.




DEAN BAKER, PROSPECT - The most recent projections from the non-partisan Congressional Budget Office show that Social Security will have enough money between projected taxes and the bonds in the trust fund to pay all benefits through the year 2046, with no changes whatsoever. This is very important to understand when someone like Federal Reserve Board Chairman Ben Bernanke proposes cuts to Social Security. Workers have already paid for these benefits. The Social Security tax is very regressive. Its regressivity can be justified by the progressive payback structure of the program. However, if the benefits are cut, at a point when the program can still easily afford the benefits (e.g. 10-20 years), then the government has effectively stolen from the people who paid Social Security taxes.

There are many people who want to do this - effectively default on the government bonds held by the Social Security trust fund. If this default is now on the national agenda, then it certainly seems reasonable for the workers who are losing their benefits to raise the prospect of defaulting on government bonds more generally. After all, what can possibly be the rationale of only defaulting on the government bonds held by workers through the Social Security trust fund, but not defaulting on the government bonds held by the wealthy people who think this is such a good idea?


DEAN BAKER, PROSPECT - The lead article in the Washington Post today prominently featured the "Social Security and Medicare" scare again. . . The article also includes the inaccurate claim that the Social Security trust fund is projected to "dry up completely" by 2017. Actually, the fund is projected to hold more than $4 trillion in U.S. government bonds by that date. President Bush's Social Security trustees project that the fund will hold sufficient assets to pay all benefits through the year 2040. The non-partisan Congressional Budget Office projects that it will be able to pay all benefits until 2046 (and 80 percent of scheduled benefits in future years). The paper should at least be able to accurately report the Social Security projections.


JUNE 2005. . .

From the beginning of the Social Security scare, one journalist has gotten it right: Doug Henwood of the Left Business Observer. In the most recent issue, Henwood points out that "The ludicrously dire projections for Social Security's future only make sense when they're considered as part of a massive propaganda campaign to promote the privatization of Social Security, a long-standing obsession of the U.S. right largely unshared by the broader population. Polls show large majorities in favor of leaving the system largely as it is-even among the young, who are more friendly to the idea of private accounts than the middle-aged and elderly. Polls also show the public with far more pressing economic concerns, like low wages, scarce jobs, and rising health insurance costs. So people must be scared into giving up Social Security." Every journalist writing about Social Security should be required to read Henwood's latest article in which he shows, for example, that the ratio of nonworkers to workers - part of the alleged looming threat - is actually far better than it was in the 1950s. Another chart illustrates that the Social Security trustees are projecting a future significantly worse than the reality we have lived with.


[As usual, other sources of funding - such as the bloated military and homeland security budgets or billions spent to repay campaign contributors - are not mentioned]

APRIL 2005. . .


PROGRESS REPORT - The president proposed deep Social Security benefit cuts for middle-class Americans. He formally "backed a specific plan to reduce future benefits for tens of millions of Americans." Yet in presenting the idea of progressive indexation - a change in law that will give workers less money by tying their benefits to inflation instead of wage growth - President Bush described it as a system "where benefits for low-income workers will grow faster than benefits for people who are better off." Here is the part he skipped: the plan "would reduce annual benefits for an average wage-earner who is 25 today and retires in 2045 by 16 percent.… For an average-earner who retires in 2075, the benefit reduction would be 28 percent."

Not only did the president not acknowledge the sweeping cuts that would be made under his plan, but his definition of a "high wage earner" was equally as misleading. A worker making $58,000 a year - who will see his or her benefits cut by 42 percent under the president's plan - certainly could not be considered "affluent."


A NEW REPORT finds that CEOs of Wall Street firms supporting the partial privatization of Social Security effectively pay into the system for only a few days a year. That is because Social Security tax payments are capped. The CEO of Charles Schwab, David Pottruck, finished paying his Social Security taxes before the end of the Rose Bowl on January 1st. That's $87,900 in a few hours

The report from United for a Fair Economy and the Institute for America's Future found that:

- Of the 26 CEOs at public and U.S.-owned firms, average compensation in 2004 was $17,712,239.

- While 94 percent of workers effectively pay 12.4 percent of their annual income, including employer's contribution, these CEOs pay an average effective rate of 0.16 percent of their annual income toward Social Security taxes. The average taxpayer pays an effective rate that is more than 201 times the effective rate of the average CEO in this group.


DANEIL SCHORR, CHRISTIAN SCIENCE MONITOR - About 3.1 million children under 18 receive [Social Security] benefits because a parent has died or become disabled. Another 2.2 million children live in households where at least one adult receives Social Security benefits. For many families, Social Security is the primary, if not the only source of support, preventing many low-income families from falling into poverty.

The current Social Security debate tends to be couched almost entirely in terms of individual retirees, as though they have no spouses, or children, or grandchildren. The debate loses sight of the fact that Social Security was designed as a family insurance program. When the Bush administration talks of introducing private investment accounts, it doesn't say how this would affect disabled younger workers who can't accumulate enough assets to start such an account.

In the aftermath of 9/11, most of the children who lost a parent, and surviving parents who stayed home to care for children, qualified for Social Security benefits, along with workers who were disabled on that day. Social Security is, in fact, the largest children's program America has.



ECONOMIC POLICY INSTITUTE - Social Security is not going broke. Each year, in early spring, the trustees of Social Security release their report. As required by law, the trustees present what can be described as their best guesses for three different scenarios for the future of Social Security. In their annual report for 2004, the trustees project that Social Security will take in more in income than it will pay out in expenditures until 2018. Between 2018 and 2028, interest income earned on the trust fund assets is forecasted to make up the difference between income and expenditures. After 2028, Social Security is expected to draw down its trust funds to pay for the expenditures that are not covered by income. Finally, in 2042, the trust fund assets are expected to be gone, and income is projected to be less than expenditures. However, the trustees project that Social Security will still be able to pay?74% of its promised benefits from 2042 to 2078, and those benefits would still be higher in real (inflation-adjusted) terms than retirees are being paid today.

Social Security is not going broke. The trustees instead project a financing shortfall that may happen almost 40 years from now. The nonpartisan Congressional Budget Office doesn't project a shortfall until 2052. The trustees' projections are based on pessimistic assumptions. Real growth is expected to fall to between 1.7% and 1.8% over the long-run, which has never been the case for an extended period of time during the post-war years. Similarly, the trustees assume that in the long-run the economy will settle on an average productivity growth rate of 1.6%, which is again too low by historical standards. Higher productivity and consequently faster real wage growth -- which have both historically been about 2.0% -- would be more realistic and improve Social Security's finances.


JONATHAN WEISMAN, BOSTON GLOBE - The Bush administration's Social Security blitz is unusual in scale in the selling of a domestic policy, mobilizing the president and vice president, four Cabinet secretaries, and 17 lesser officials, down to an associate director of strategic planning for the White House budget office.

It also may be one of the most costly in memory, well into the millions of dollars, according to some rough, unofficial calculations. House Appropriations Committee Republicans have quietly asked the administration for an accounting of its "60 Stops in 60 Days" blitz. And on Wednesday, Representative Henry Waxman of California, the ranking Democrat on the Government Reform Committee, formally asked the Government Accountability Office not only for the cost but also "whether the Bush administration has crossed the line from education to propaganda."

CTR FOR BUDGET & POLICY PRIORITIES - In the average state, Social Security benefits are the difference between being poor and not being poor for roughly a quarter of a million seniors, said Arloc Sherman, senior researcher at the Center. In both Florida and California, Social Security lifts more than a million of the state's seniors out of poverty. If Social Security income is not counted, nearly half of all elderly Americans have incomes below the poverty line. Social Security reduces the poverty rate among the nation's elderly to one in twelve (9 percent).


TWO INTERESTING results from a Washington Post poll on Social Security. 49% of Americans think we spend more on foreign aid than on Social Security. And 81% favor raising the Social Security cap so that workers earning more than $90,000 have to pay on that extra income. As the Review pointed out as far back as 1998, "One reason this is never mentioned: it would hit the pocketbooks of those who are having the most to say on the subject." Now, finally, the matter is under discussion.

PROGRESS REPORT - African-Americans depend heavily on Social Security benefits, which would be cut under President Bush's plan. The AARP found African-Americans rely on Social Security benefits for about 44 percent of their income in retirement. That number is even higher for African-American women, who are likely to rely on Social Security for 56.8 percent of their income in retirement. On top of that, African-Americans are less likely to have income from private assets; thus "Social Security is the only source of income for one in three African Americans over age 65." According to Hillary Shelton of the NAACP, "African-American children are almost four times as likely to be lifted out of poverty by Social Security benefits than our white counterparts." A full "22 percent of Black Americans" today rely on Medicaid for their health care. President Bush's new budget would slash Medicaid by $45 billion over the next decade, cutting crucial services and benefits.



NOW President Kim Gandy says, "Women, regardless of age, have the most to lose under Bush's privatization scheme." On average, women in the U.S. make less than $30,000 a year. Women earning such low wages will not be able to contribute enough into a private account to purchase an annuity that will sustain them over an expected 20 years of retirement life. In addition, many insurance companies that sell annuities unfairly discriminate against women by charging them more (or paying lower benefits) because they live longer on average than men. And Bush never addresses the fact that Social Security is also a disability insurance and life insurance (survivors' benefits) program, which would be irreparably weakened by draining funds from the insurance pool-and those life-sustaining benefits would be reduced without recourse.

"Women, particularly women of color who earn considerably less over their lifetimes, will be put at great risk by reducing their guaranteed benefits and then subjecting their small investments to market forces," said Gandy. "Under a privatization plan, the working poor will lose the compensatory increased Social Security benefit paid to lifetime low-income earners and they will lose the guaranteed, inflation- proofed benefit."



DWIGHT Eisenhower wrote his brother Edgar on May 2, l956: "Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again.... There is a tiny splinter group, of course, that believes you can do these things. Among them are H.L. Hunt...a few other Texas oil millionaires, and an occasional politician or businessman from other areas. Their number is negligible and they are stupid."


IN ALL the talk about Social Security we have seen no discussion as to how well small investors - especially those with no previous experience - do in the stock market. Such statistics should be publicly examined before this business goes much further.

This is not a trivial matter. For example research by Devin M Shanthikumar and Ulrike Malmendier at Stanford found that "large (institutional) investors generate abnormal volumes of buyer-initiated trades after a positive recommendation only if the analyst is unaffiliated. Small (individual) traders exert abnormal buy pressure after all positive recommendations, whether the analyst is affiliated or unaffiliated. Large traders also exert significant selling pressure in response to hold recommendations, and no pressure in response to buy recommendations while small traders exert zero pressure for hold recommendations and significantly positive pressure for buys. The trading behavior of small investors induces losses relative to large investor trading behavior, since stocks recommended by affiliated analysts perform significantly worse than those recommended by unaffiliated analysts."

In other words, small investors listen to analysts who have a vested interest in what they promoting, but big investors don't - which is not a good idea for the former since affiliated analysts do considerable worse in the market. Further, small investors are likely to take the advice "hold" literally, while big investors know it is frequently used as a code word for "sell.'

In a separate paper Shanthikumar reported that "Small traders exert buy pressure after an earnings announcement, whether that announcement is good or bad news, but they buy more strongly for a positive earnings surprise than for a negative one. . . [My] paper presents consistent evidence of an eventual overreaction in small trader behavior, both relative to large traders and to a benchmark of zero."

Without knowing much more about small investor behavior we can not really know to what extent the economically indefensible privatization plan is also a con game to rip off a new class of small investors.


LARRY ROHTER, NY TIMES - Nearly 25 years ago, Chile embarked on a sweeping experiment that has since been emulated, in one way or another, in a score of other countries. Rather than finance pensions through a system to which workers, employers and the government all contributed, millions of people began to pay 10 percent of their salaries to private investment accounts that they controlled.

Under the Chilean program - which President Bush has cited as a model for his plans to overhaul Social Security - the promise was that such investments, by helping to spur economic growth and generating higher returns, would deliver monthly pension benefits larger than what the traditional system could offer.

But now that the first generation of workers to depend on the new system is beginning to retire, Chileans are finding that it is falling far short of what was originally advertised under the authoritarian government of Gen. Augusto Pinochet.


WASHINGTON POST - "Semantics are very important," House Ways and Means Committee Chairman Bill Thomas (R-Calif.)said last week when a reporter asked about "private" accounts. "They're personal accounts, not private accounts. No one is advocating privatizing Social Security."




MEDIA MATTERS - Nationally syndicated radio host and former Reagan administration official William J. Bennett and FOX News managing editor and anchor Brit Hume falsely claimed that President Franklin Delano Roosevelt advocated replacing Social Security with private accounts. In fact, while Roosevelt advocated "voluntary contributory annuities" to supplement guaranteed Social Security benefits, he never proposed replacing those benefits with private accounts.

Roosevelt was not advocating that the present system of guaranteed Social Security benefits "ought to ultimately be supplanted by self-supporting annuity plans." Rather, he was proposing that both guaranteed Social Security retirement benefits and voluntary annuities would eventually eliminate the need for a different fund which was established to provide pension benefits to Americans who were already too old in 1935 to contribute payroll taxes to the Social Security system.

Former Social Security associate commissioner James Roosevelt Jr., Roosevelt's grandson, noted in a January 31 Boston Globe op-ed piece: "The implication that FDR would support privatization of America's greatest national program is an attempt to deceive the American people and an outrage."


ROBIN TONER, NY TIMES - Roosevelt, his labor secretary, Frances Perkins, and the other architects of Social Security tried to construct a peculiarly American form of social insurance, one that recognized the strain of rugged individualism that runs deep in the national psyche. Roosevelt insisted that the new program not look like a dole, his aides later explained; rather, it should resemble a private insurance plan, tied to an individual's contributions in their working years. "You want to make it simple, very simple," Roosevelt told his aides, Perkins later wrote in a memoir. "Just simple and natural nothing elaborate or alarming about it." Along the way, the New Dealers set aside the idea of adding national health insurance to the package, assuming that it would come later. (It never did.)

Even so, Perkins wrote that when she went before Congress to present the plan, Senator Thomas Pryor Gore of Oklahoma had a pointed question.
"'Isn't this socialism?' he asked me. My reply was, 'Oh, no.' Then, smiling, leaning forward and talking to me as though I were a child, he said, 'Isn't this a teeny-weeny bit of socialism?'". . .

Before the creation of Social Security, some Americans had private or state pensions, but most supported themselves into old age by working. The 1930 census, for example, found 58 percent of men over 65 still in the workforce; in contrast, by 2002, the figure was 18 percent.

The elderly also relied heavily on their families. "Children, friends and relatives have borne and still carry the major cost of supporting the aged," the Committee on Economic Security, the Roosevelt administration panel that developed Social Security, reported in 1935. "Several of the state surveys have disclosed that from 30 to 50 percent of the people over 65 years of age were being supported in this way."

The Depression swept this world away. Many of the elderly could no longer find work. Those who had been lucky enough to have a pension or some savings saw them disappear. And many who relied on their children saw them buckle under the strain. .



PR WATCH - "President Bush's political allies are raising millions of dollars for an election-style campaign to promote private Social Security accounts, as Democrats and Republicans prepare for what they predict will be the most expensive and extensive public policy debate since the 1993 fight over the Clinton administration's failed health care plan," reports Jim VandeHei. According to Stephen Moore, head of the conservative Club for Growth, "It could easily be a $50 million to $100 million cost to convince people this is legislation that needs to be enacted. It's going to be expensive" because "it's the most important public policy fight in 25 years." Blogger-journalist Joshua Micah Marshall has been dissecting a leaked White House memo detailing its plan to sell the plan, which the memo describes as a way to "transform the political and philosophical landscape of the country." And the Columbia Journalism Review's CampaignDesk has been fact-checking ways that journalists have been screwing up the Social Security story.



PAUL KRUGMAN, NY TIMES - The grain of truth in claims of a Social Security crisis is that this tax increase wasn't quite big enough. Projections in a recent report by the Congressional Budget Office (which are probably more realistic than the very cautious projections of the Social Security Administration) say that the trust fund will run out in 2052. The system won't become "bankrupt" at that point; even after the trust fund is gone, Social Security revenues will cover 81 percent of the promised benefits. Still, there is a long-run financing problem.

But it's a problem of modest size. The report finds that extending the life of the trust fund into the 22nd century, with no change in benefits, would require additional revenues equal to only 0.54 percent of GDP. That's less than 3 percent of federal spending - less than we're currently spending in Iraq. And it's only about one-quarter of the revenue lost each year because of President Bush's tax cuts - roughly equal to the fraction of those cuts that goes to people with incomes over $500,000 a year. Given these numbers, it's not at all hard to come up with fiscal packages that would secure the retirement program, with no major changes, for generations to come. . .



[Both presidential campaigns and the media are badly misleading Americans about the state of Social Security. This is in part because they are using the most pessimistic of the SS trust fund projections. These projections, if true, would mean the US faces a permanent recession for decades to come, suggesting, incidentally, that the last thing you would want to do is invest your Social Security saving in the stock market]

[From Robert Ball, a former Social Security commissioner, makes a few suggestions on how to bring more bucks for the program]

- Raise the tax ceiling to cover more of what high-income earners make. Right now, workers and employers don't pay Social Security taxes on any individual earnings over $87,900 a year -- limited contributions for limited benefits. That ceiling is adjusted every year. In 1983, Congress set a ceiling that would subject 90 percent of covered earnings to the Social Security tax. Currently, however, only about 85 percent of covered earnings are being taxed (and credited to workers' accounts for purposes of calculating benefits). This is a major reason why Social Security faces a long-range deficit. . .

- Fix the cost of living adjustment. Social Security benefits are adjusted annually to maintain purchasing power. In determining the amount of the cost of living adjustment, Social Security uses a consumer price index developed many years ago by the Bureau of Labor Statistics. That index measures changes in the price of a representative basket of goods and services. The Bureau, however, has developed a more accurate CPI that takes into account the effect of consumers substituting one type of purchase for another. . .
- Dedicate a limited estate tax to Social Security. Under present law, the estate tax is being phased out; by 2010, only estates valued at $3.5 million or more will be taxed. If the tax is kept in place at the 2010 level (rather than being completely eliminated, as President Bush proposes), the revenues, if earmarked for Social Security, would reduce the Social Security financing gap by another 0.6 percent of payroll. . .

- Create a failsafe mechanism. We can meet this residual gap, if it exists, by instituting a flexible payroll tax rate that would take effect later. Even before taking effect, it would be adjusted as forecasts change. This "balancing rate," as I call it, would quantify the shortfall and represent a commitment to filling it. This failsafe provision would be activated automatically if Congress neglected to adjust revenues and expenses to changes in the estimates.



Increase in Social Security payments to be made to workers in January based in change in CPI over past year: 2.7%

Decline in hypothetical privatized Social Security account over past year if invested in the Dow Jones average: 9.5% - Progressive Review


JONATHAN WEISMAN, WASHINGTON POST - President Bush's push to create individual investment accounts in the Social Security system would hand financial services firms a windfall totaling $940 billion over 75 years, according to a University of Chicago study to be released today. . . Bush has expressed strong support for allowing workers to divert some of their Social Security taxes to accounts that could be invested in stocks and bonds. But he has never embraced a specific proposal to revamp Social Security, even after his own Social Security Commission presented him with three reform options.


BRIAN GILMORE, PROGRESSIVE MEDIA PROJECT - Although African-Americans comprise 12 percent of the population, they represent 17 percent of the population that receives disability benefits through the Social Security program, according to the Social Security Administration. For 37 percent of African-Americans who are classified as elderly, Social Security retirement is, in fact, their only source of income, compared to 20 percent of the general population. And without these benefits, the poverty rate for elderly African-Americans would more than double, from 24 percent to 65 percent, the Social Security Administration estimates. As for African-American children, "23 percent of all children receiving Social Security survivor benefits are African-American." . .

JULY 2004

[Robert Ball, a former Social Security commissioner, makes a few suggestions on how to bring more bucks for the program]

o Raise the tax ceiling to cover more of what high-income earners make. Right now, workers and employers don't pay Social Security taxes on any individual earnings over $87,900 a year -- limited contributions for limited benefits. That ceiling is adjusted every year. In 1983, Congress set a ceiling that would subject 90 percent of covered earnings to the Social Security tax. Currently, however, only about 85 percent of covered earnings are being taxed (and credited to workers' accounts for purposes of calculating benefits). This is a major reason why Social Security faces a long-range deficit. . .

o Fix the cost of living adjustment. Social Security benefits are adjusted annually to maintain purchasing power. In determining the amount of the cost of living adjustment, Social Security uses a consumer price index developed many years ago by the Bureau of Labor Statistics. That index measures changes in the price of a representative basket of goods and services. The Bureau, however, has developed a more accurate CPI that takes into account the effect of consumers substituting one type of purchase for another. . .

o Dedicate a limited estate tax to Social Security. Under present law, the estate tax is being phased out; by 2010, only estates valued at $3.5 million or more will be taxed. If the tax is kept in place at the 2010 level (rather than being completely eliminated, as President Bush proposes), the revenues, if earmarked for Social Security, would reduce the Social Security financing gap by another 0.6 percent of payroll. . .

o Create a failsafe mechanism. We can meet this residual gap, if it exists, by instituting a flexible payroll tax rate that would take effect later. Even before taking effect, it would be adjusted as forecasts change. This "balancing rate," as I call it, would quantify the shortfall and represent a commitment to filling it. This failsafe provision would be activated automatically if Congress neglected to adjust revenues and expenses to changes in the estimates.


MAR 2004


ALAN GREENSPAN has given the effort to scare Americans out of Social Security another boost, aided as always by a non-critical press. NPR even reported falsely this morning that the Social Security trust fund would go broke in 2018 when in fact that date is only when it is estimated that expenses will exceed revenues. Here, once again, are a few facts to keep in mind as the robber barons try to steal your old age pension:

1. The trustees make three long-term estimates. The one that politicians and the media invariably use is the most pessimistic which assumes economic growth so low that you certainly wouldn't want your Social Security invested in the stock market because it wouldn't be going anywhere. Using the more reasonable intermediate projection, the trust fund will not run out until after 2040.

2. The trust fund is an artificial accounting creation If it runs out, then Social Security can be funded from other sources including the incredibly bloated military budget. To understand this game, imagine the defense budget came out of a trust fund. Would we stop defending ourselves when this fund was drained thanks to typical defense cost overruns?

3. While it is true that there will be an increase in older Americans in coming decades, there will also be a smaller percentage of younger Americans to educate and take care of. In considering public costs, it is the combination of these two - the so-called dependent population - that matters. Here is what you are not being told: the dependent population was larger during the Kennedy administration than it will be in 2020 during the Great Social Security Crisis. Here are the actual percentages of total population:


Children: 36%
Seniors: 9%
Total dependent population: 45%


Children: 24%
Seniors: 16%
Total dependent population: 40%

Incidentally, as of 2000, the total dependent population was 39% so we're talking about a one point increase.

In short, you are being conned on Social Security and the media is doing nothing to defend you.

MAY 2003


LOS ANGELES TIMES - Your next annual statement from the government estimating your Social Security retirement benefits will state in blunt language that those funds are in jeopardy. As if today's workers weren't worried enough that Social Security will not be there when they need it, the Social Security Administration will tell them: "Action is needed soon to make sure that the system is sound when today's younger workers are ready for retirement." The warning, which the government plans to unveil today, will be included in the annual letter from Social Security to 138 million workers over the age of 25, estimating their benefits under various retirement strategies.

The nation's elderly are its fastest-growing population group. The Social Security letter estimates that the number of people older than 65 will double within the next 40 years. Thus the number of Social Security beneficiaries will grow much faster than the number of workers who are paying the payroll tax. Tax revenue now far exceeds benefit payments, but the letter estimates that will last only 14 more years under current law. "By 2042," it warns, "the Social Security Trust Fund will be exhausted."


1. The trustees have to keep changing the day of Doomsday because they're repeatedly wrong. A chart by the Economic Policy Institute, illustrates some of these changes. According to the chart, the trust depletion date grew twice as fast as the trustee's annual reports.

2. The argument that there won't be enough workers left to pay for Social Security is statistically wrong, as the Left Business Observer illustrated in this chart. The number of workers per non-worker in our society is much higher than in the past.

3. The trustees use an inordinately pessimistic projection of economic growth when they make their predictions. This means, among other things, that there's no hope in privatizing the market, because if the trustees are right in their projections, we will be in a permanent recession. While this chart from the Left Business Observer is 9 years old, it illustrates the point. As LBO's Doug Henwood said at the time, "Either the trustees are deliberately projecting slow growth to feed the pension-cutting mania, or they're expressing a deep pessimism about the U.S. economy's future. Big news, whichever it is."





[The following headlines are from the same web page of the Cato Institute but at different times. The second reflects changes made after the stock market unpleasantness.]

About the Project on Social Security Privatization

About the Project on Social Security Choice


AMY GOLDSTEIN, WASHINGTON POST: A White House commission assigned to forge consensus for profound changes to Social Security yesterday approved a gloomy assessment of the nation's retirement system, and immediately began fending off partisan criticism that the panel is exaggerating the program's frailties. In an uncommonly vitriolic exchange for a presidential commission early in its work, panel members called their opponents "know-nothings" and "Luddites." In turn, a key House Democrat called on President Bush to "throw out this commission that has no credibility" and begin direct, bipartisan negotiations over Social Security's future . . . The 30-page document was unanimously endorsed by the panel yesterday after minor changes to a draft issued last week. The document was intended to lay the groundwork for its main assignment from Bush: to design a system of private retirement accounts that would use some of the payroll taxes that now pay for 40 million Americans to receive monthly Social Security checks . . . Outside, dozens of pickets from labor unions, advocates for the elderly and women's groups clogged the sidewalk in front of the Washington hotel where the panel met -- part of 40 protests that opponents of the commission orchestrated around the country. Two other groups of opponents, including several congressional Democrats, staged midday news conferences to amplify their criticism of the report. MORE

|||||||| SOCIAL SECURITY FACTS ||||||||||||||||||||||||||||||

- The alleged Social Security disaster is premised on low levels of economic growth. If times are better than predicted, then the projections are wrong and the trust fund will remain solvent longer. If times are as bad or worse than projected, however, then the stock market is bad place to put one's money. In other words, the Social Security hustlers are predicting economic gloom for the trust fund but a boom for the market. You can't have both.

- One way to raise more Social Security funds is to increase the cap on the income that is taxed for them. Imagine if SS commission members like Robert Parsons, chief operating officer of AOL Time Warner, had to pay Social Security taxes on the first $760,000 of their income instead of only the first $76,000. The fact that this alternative is not discussed by politicians and the media reveals the true agenda bheind this phony crisis: raiding Social Security to benefit corporate stock values. The Economic Policy Institute estimates that eliminating the cap on taxed earnings would take care of three-quarters of the projected shortfall.

- The trustees have repeatedly had to change their estimates. In 1996, they estimated that the fund would run out in 2029; the latest estimate is 2037. At this rate of altered projections, the trust fund will never run dry.

- As Jeff Faux has noted, every dollar that the Social Security system puts in government bonds is a dollar that the federal government doesn't have to borrow from other sources. Because the trust fund has been used to pay off debt, it reduces the amount the government spends on debt service, and makes it easier to pay benefits to retirees.

- The Social Security "trust fund" is an accounting device. The money for Social Security only comes from there because Congress said it has to. Congress could just as easily get the money from general revenues. In fact, it has - as recently as the mid-90s. Better yet, why not put the military budget in a trust fund and let that run out of money instead.

- As a percent of GDP, the increased cost of Social Security over the next 75 years will be less than increased education spending between 1946 and 1966 or about the same as the increase in Social Security taxes between 1960 and 1995.

- Some of the fear concerning SS is based on the presumed burden of a growing older population. But the non-working population includes not only the old but children as well. When you look at the total projected dependent population, the projected burden becomes roughly equivalent to that of Kennedy's time, which is to say, quite manageable.

- If the system is privatized you have the potential of the government using its stake to directly manipulate the markets. There are reports of this having already occurred, but the large sums of money available under privatization would make the temptation even more appealing.



[The following starts with the 14th paragraph of a story in the NY Times, illustrating well how political propaganda - in this case the supposed sanctity of the Social Security "lock box" - trumps reality these days]

In economic terms, it makes little or no difference whether the government spends a few billion dollars of the Social Security surplus in any given year. The surplus in the program is expected to total about $162 billion this year.
For decades, the government routinely spent the entire Social Security surplus to cover shortfalls on other programs, and a decision to resume using the surplus for that purpose would pose no threat to current recipients of Social Security checks.

But the political implications are vast, since both Republicans and Democrats have described the Social Security surplus as a symbolic bulwark against fiscal irresponsibility in Washington and as a vehicle to pay off the national debt. Last year's Republican platform could not have been much more blunt. "The Social Security surplus is off limits, off budget and will not be touched," it said.
Democratic and Republican Party leaders are accusing each other of hypocrisy on the issue, which is threatening to dominate several Congressional races next year, especially in House districts where Social Security recipients dominate the voting rolls.

AT LEAST THE TIMES eventually gave its readers a dose of reality, albeit well hidden. Elsewhere we have been treated to nonsense like ABC's George Stephanopoulos last summer interviewing White House economic adviser Larry Lindsey: "After this mid-session review budget report came this week, both you and President Bush mentioned what seemed to be a new exception to taking money from the Social Security lock box. You said that when there's a recession you can dip into the lock box. What's the economic rational for that?"

Here are some more recent examples of lock box lock jaw, compiled by the Media Research Center:

NBC Nightly News anchor Stone Phillips demanded: "They promised to protect Social Security, but news tonight they may have to take $9 billion from the trust fund to pay the bills. What happened to all the money?" NBC and CBS referred to the need to "dip into Social Security."

ABC anchor Charles Gibson was just plain wrong when he declared, "Democrats and Republicans alike have always sworn on a stack of Bibles that Social Security was absolutely, totally, completely off limits."

Others have kept their facts straight. After Robert Novak explained to Tim Russert that there is no Social Security Trust fund, Russert referred to it as the "so-called Social Security Trust Fund," which caused Lisa Myers to point out, "One thing we should add about the Social Security surplus: Until two years ago Congress and the President spent every dime of that money."

RUSSERT: Including the Democrats.
MYERS: Including the Democrats. And now it's being treated as though it's politically sacred. But economically it makes almost no difference.

And Fox News' Brit Hume asked Larry Lindsey some time back: "We keep hearing that the Social Security surplus may be invaded, which is to say that these payroll tax revenues that come in, which are estimated to be in excess of what's necessary to pay benefits by somewhere between $155 and $160 billion this year, will not be touched, that they're in a quote, 'lock box,' unquote. In fact though, sir, isn't it the case that the money will be very much touched and it will be loaned back to the government. Social Security will get IOUs or government securities and what will happen is the money will be used to pay down other government debt, correct?" Lindsey: "That's correct..."

Meanwhile, a reliably sane voice in this whole matter, Robert Kuttner, wrote in the Washington Post: "A budget is a means, not an end. Until Ronald Reagan, the budget usually ran a modest deficit. Throughout the postwar boom, government borrowing financed things that Americans valued and that stimulated economic growth: highways, airports, jobs, a healthier and better educated population. As long as the economy grew faster than the public debt, deficits were no problem. Prolonged and excessive deficits such as Reagan's indeed do damage. But not until the overreaction to Reagan's deficits was budget balance per se equated with fiscal virtue. Ever since Reagan, Democrats have viewed deficits as a terrific club to pillory Republicans. This yields short-term satisfaction, but in the long run it just makes Democrats into a different kind of conservative party."

ROBERT REICH, WALL STREET JOURNAL: The Bush administration should state flatly that it doesn't matter if the so-called Social Security surplus erodes this year, or even next . . . The Social Security surplus is an accounting fiction. It didn't even exist until about 18 months ago, when some Democratic advisers thought such an invention might be a good bulwark against candidate Bush's proposed tax cut. In light of swelling surpluses, merely to 'Save Social Security First' wasn't enough of a defense, so Democrats raised the rhetorical bar to 'Save the Social Security Surplus First.' Republicans were cowed into agreeing that we should put the surplus some place where it couldn't be touched. This fictional 'lock box' was harmless enough when the economy was booming, but makes no sense when it's slowing. The White House should be clear with the public: Under current conditions, it's perfectly permissible for total government expenses to rise relative to total revenues, including revenues from payroll taxes and current payouts for Social Security. And Democrats should stop their bellyaching about 'raids.'

RICHARD B. DU BOFF, professor of economics at Bryn Mawr College: "If the real GDP growth is as slow as the projections, can anyone believe that the stock market will not be adversely affected? If the stock market is rising at a healthy pace then Social Security will also have the funds it needs to keep solvent and there is no case for privatization, especially since Social Security has a lean and mean overhead cost of only 1 percent whereas similar private sector endeavors such as the life insurance industry have exorbitant overhead rates averaging 12 to 14 percent of the benefits."

MARK WEISBROT, Center for Economic and Policy Research: "The 'President's Commission to Strengthen Social Security' is anything but that. The standard projections, which are used by the Commission, assume the slowest economic growth in the nation's history. Yet they still show that all promised benefits will be paid for the next 37 years without any changes at all, and that the program will always be able to pay a larger benefit than current retirees receive. In order to argue that Social Security is 'broken,' the Commission wants to pretend that the $1.1 trillion of U.S. government bonds held by the Social Security trust fund are not worth anything. Try telling that to Salomon Brothers, Bill Gates, or any billionaire or pension fund holding U.S. Treasury bonds."


RICHARD DU BOFF, UNCOMMON SENSE: [Du Boff is a professor of economics at Bryn Mawr College] The economic burden of supporting retirees is often measured by what is called the "dependency ratio"--the number of elderly compared to the number of people of working age (20 to 64 years). This ratio is projected to rise from 21.4 seniors per 100 workers in 1995 to 35.5 seniors per 100 workers in 2030, as the number of Americans aged 65 and over grows from 34 million to around 70 million--and from 13 to 20 percent of the population. Thus, as the postwar baby boom generation reaches retirement age starting in 2012, it will have to be supported by the relatively smaller cohort born during the low birth-rate years of the past three decades. The problem here is that the working population must support all those who do not work--children as well as the elderly. This "total dependency ratio" changes the picture: the ratio of all dependents to workers is projected to rise from 70.9 percent in 1995 to 78.8 percent by 2030 and 80 percent in 2050. Not only does this represent a much lower rate of growth than when only the elderly are included; it also reveals that total dependency at its estimated future peak will still be well below what it was from 1960 to 1975, when it averaged 89 percent of those working. Total dependency ratios are anything but irrelevant. In the United States, the costs of educating the baby boomers caused large, possibly unprecedented, increases in spending on education during the decades following the Second World War. At that time, our economic productivity was far less than today's. In real (price-corrected) terms, gross domestic product per capita in 1960 was less than half of what it was in 1998, and much less than what it will be in the next century. In other words, one worker today can produce far more than the same worker did four decades ago, and less than what his or her successor will be able to produce four decades from now. It seems safe to say that if we could afford to pay for the education of the baby boomers, we can afford to pay for their retirement.



As we have pointed out from time to time, the pending "collapse" of Social Security is a scam without actuarial or other objective substance. Now comes the Institute for Public Accuracy with a quote from former NY Times reporter John Hess that backs up our reporting: "The notion that Medicare and Social Security are going broke has been a great hoax used repeatedly since 1975. Whole generations of Americans have been needlessly frightened into believing that these programs will not be there. This makes people sit still for things like raising the age when you receive Social Security benefits and cutting Medicare."




One of the best kept secrets in Washington is that the Social Security scare has been based on unrealistic economic growth projections. Robert Reich, who as Secretary of Labor signed off on these gloomy projections, now tells the Left Business Observer: "I think that at the earlier part of the 90s those extraordinarily safe and conservative projections were not unreasonable. But now they're foolish. We've had a number of years now of economic growth over 4%; even if the economy slows down it's very unlikely that growth will be under 2.5 or 2.6% a year, and with that pace of growth Social Security is a non-issue. It won't be a problem. We'll be able to pay all our Social Security obligations."

LBO said to Reich, "Nobody says that in public." Replied Reich, "I've said it in public on at least 20 occasions, including national television and radio. It ought to be said more often."

Indeed so, and a good place to start would be for major media to admit they were complicit in creating the Social Security hysteria of the 1990s.

LEFT BUSINESS OBSERVER: http://www.panix.com/~dhenwood/

For six years or so, TPR has argued that a good way to cover any shortfall in the Social Security trust fund is to make everyone who wants to privatize SS pay withholding tax on all their income above the current $72,600 cap. Now it looks as though the idea may be catching on. The Social Security Administration has studied the matter and found that eliminating the cap would cover 98% of Social Security costs for the next 75 years. Under this plan, three-quarters of the burden for Social Security would fall on persons earning over $52,000 a year. Proposals to reduce benefits, on the other hand, would fall most heavily on the bottom fifth of the population. Senator Ted Kennedy has started pressing for lifting the cap.

Following in the footsteps of Doug Henwood of Left Business Observer, I have tried to make the point that the Social Security crisis is based on a curious projection by the SS trust fund actuaries of recession level growth well into the next century. Which means, among other things, that the stock market won't rise enough to meet the dreams of the Social Security privatizers.

This crucial point has been largely ignored by media conglomerates but at least it is no longer the exclusive preserve of progressive journals. Business Week recently ran a column by Aaron Bernstein in which he makes the same point: "If you think that the markets will match their historic performance, you shouldn't be worrying so much about Social Security. And if you buy the notion [of the trustees] that we're in for 75 years of 1.4% growth, you have a lot more to worry about than Society Security."


[Excerpts from a statement by Jeff Faux of the Economic Policy Institute to the White House Conference on Social Security]

* The increased cost of Social Security over the next 75 years will amount to about 2.5 percent of GDP. This is not an extraordinary economic burden. In comparison, increased education spending between 1946 and 1966 cost almost 3 percent of GDP. And increases in Social Security taxes between 1960 and 1995 amounted to roughly 2.5 percent of GDP. Throughout this period, economic growth continued, living standards rose, and we were able to finance the Cold War.

* One hundred percent of the shortfall can be covered as follows: -- Applying to the Social Security projections technical improvements in the forecasting of prices that have already been made by the Bureau of Labor Statistics but that have not yet been incorporated into the projections. (13 percent) -- Raising the "cap" on taxable wages back to the level, relative to all wages, at which it stood in the early 1980s - $97,000 in today's dollars. This would also entail raising the cap on benefit payments. (25 percent) -- A small increase in the payroll tax, indexed to the increase in longevity. The increase needed would be 0.02 percent annually for both the employer and employee contribution. (64 percent)

* That Americans will be living longer is good news. But it will mean spending more years on Social Security, which will cost more. The choice is cutting benefits or paying a little more in taxes. Cutting benefits would mean living longer at a lower living standard, and would be particularly hard for the 42 percent of the elderly whom Social Security lifts out of poverty. Even in the trustees' pessimistic projections, real wages will rise 1.1 percent per year, making a tax increase of 0.02 percent a tiny price to pay to assure workers full benefits while they are living longer.

* Citing annual stock market gains of 7 percent over the last 75 years, many claim that workers could get much higher returns than the system now provides by investing their Social Security contributions themselves. This is wrong, for the following reasons: -- If the projected growth rate of the economy declines by half, as the Social Security trustees assume, the projected returns from the stock market must also decline. A stock market consistent with the Social Security projections would generate a return of about 3.5 percent. The management fees for administering private accounts are estimated by the President's Advisory Council on Social Security to come to 1 percent of the accounts' value, bringing us to a typical return for a privatized account of about 2.5 percent. -- Current contributions support current retirees. If contributions are diverted to private investment accounts, taxes will have to be raised or other government benefits cut in order to pay for current benefits. -- Investing in the stock market is risky, and many workers would not see average returns. In addition, there is a potential for fraud and abuse, as well as the added costs of a new bureaucracy to administer a system, involving tens of millions of small accounts.


RICHARD Du BOFF, Professor of Economics at Bryn Mawr College: "If no changes are made in the structure of Social Security taxes and benefits, the system will still be able to pay 75 percent of Social Security retirement benefits due in the year 2032. This potential gap can be closed by small adjustments in taxes and benefits phased in over the next 34 years. And this scenario is based on the pessimistic assumption that U.S. economic growth over the next 75 years will be less than half of our historical rate of 3 percent per year. A ready solution to the Social Security financing problem is at hand: taking the cap off earned income subject to FICA taxes. Currently, FICA taxes of 6.2 percent are applied to earned incomes up to $68,400 -- meaning, for example, that Bill Gates probably stops paying FICA taxes sometime during the first week of January. Extending the tax to all incomes without limit would do the trick."

Top Things the Media
Won't Tell You
About Social Security

-- The projection of bankruptcy is based on the assumption of recession-level growth rates - less than half the average for the past 75 years.

-- If this projection is correct, calculates Doug Henwood of the Left Business Observer, and if the projection of privatized returns in the stock market is also correct, then stock P/Es in the year 2075 would be at least 178 as opposed to 26 today and half that in the past. In other words, the Social Security hustlers are predicting economic gloom for the trust fund but a boom for the market.

-- The SS trustees have steadily lowered their projections of growth. Henwood points out that the trustee's most optimistic projection in 1998 matches their most pessimistic one in 1981. If you use the middle projection for 1986, for example, you actually end up with the trust fund being comfortably in the black.

-- One way to shore up the trust fund is to raise the salary ceiling for SS taxes. One reason this is never mentioned: it would hit the pocketbooks of those who are having the most to say on the subject.

-- Some of the fear concerning SS is based on the presumed burden of a growing older population. But the non- working population not only includes the old but children as well. When you look at the total projected dependent population, the burden becomes roughly equivalent to that of Kennedy's time.

-- The SS trust fund is an accounting creation, the artificial nature of which contributes to the current hysteria. If SS were being funded out of general revenues (like the Pentagon or the war on drugs) you would not be hearing talk of it "going broke" but simply about how much more it was going to cost.

-- If the system is privatized not only do you face the interesting problem (as James Glassman has pointed out) of the government being one of the owners of anti-trust target Microsoft, NBC and Philip Morris, you also have the potential of the government using its stake to directly manipulate the markets. There are reports of this having already occurred, but the large sums of money available under privatization would make the temptation even more appealing.

-- If you want an example of the hazards of government investment in the market you need look no further than WJ Clinton himself. As governor in the mid-80s, Clinton and his banker, Jackson Stephens, put a big chunk of the state pension fund into high risk investments. The brokerage firm involved suddenly went belly-up and the state pension fund dropped 15% overnight. Facing a $52 million loss, Clinton was saved by his ubiquitous buddy, Mochtar Riady, who stepped in and bought 40% of Stephens' Worthen Bank in the months immediately after the disaster. The national media never covered this revealing story.



In a particularly seamy example of the disinformation now rife in the major media, a front-page story in the New York Times pawned off as "bipartisan" a plan to partially dismantle Social Security that is, in fact, the product of a right-wing think tank. Although the Center for Strategic and International Studies put some token conservative Democrats on its National Commission on Retirement Policy, the commission is deeply biased towards corporatist and conservative viewpoints.

The story headlined "Bipartisan group urges big changes in Social Security" spoke of "powerful interest groups including the American Association of Retired Persons" that oppose the commission's plan to create private investment accounts for retirees. The commission also proposed raising retirement age to 70. The commission claims its scheme would keep Social Security solvent for about 75 years -- ironically the same lifetime Robert Reich estimates for the trust fund simply using by realistic economic growth rates rather than the depression-level ones being cited to encourage the current panic.

The true nature of CSIS should be no secret to the Times. Not only has it covered its hyper-hawkish and spook-friendly projects since it was launched in the 1960s, but the paper has been one of the center's donors.

CSIS gained notoriety in the Cold War years thanks to its intimate ties with the military and intelligence establishments as well as its seeming preference for media attention over scholarship. In 1985, for example, CSIS claimed 4,100 media contacts. A year later the Washington Post referred to it as a "conservative propaganda machine."

Its associates included the likes of Henry Kissinger, Jeanne Kirkpatrick, former deputy CIA chief Ray Clines, and other macho geo-politicists such as Zbigniew Brzezinski, James Schlesinger, and Arnaud de Borchgrave.

The controversial center apparently even became a little too much for its host, Georgetown University and CSIS moved to its own quarters in downtown Washington. But one thing remained constant: its status as a conservative advocate. Ronald Reagan, for example, would use it, noted Alison Muscatine in the Washington Post, "as a favorite site for speeches attacking liberals who oppose US aid for the contras."

Although CSIS has acted in a more discreet manner in the post-cold war era, there is little doubt of its loyalty to corporatist conversion projects such as the downsizing of Social Security and the use of its funds by Wall Street. De Borchgrave is still listed as a scholar as are those of the ilk of Edward Lutwak. There is even a scholar's chair for an "Army National Guard Fellow."

On the other hand, CSIS' affirmative action program leaves something to be desired. One of its rare black scholars, so to speak, is General Julius Becton, a buddy of Clarence Thomas who has just departed as head of the DC public schools after a short but disastrous tenure.

There is one more irony to all this: CSIS was kept afloat for many years by not only the NYT, by not only a dozen or so defense contractors, by not only an Arab sheik or two, but by none other than the man the pro-Clinton establishment loves to hate: Richard Mellon Scaife. Scaife has given millions to support this organization that the Times now implies is a reliable source of wisdom on how Americans should plan for their retirement.


Thanks to amazingly successful propaganda about the state of the Social Security trust fund, members of the media, politicians and millions of Americans have become convinced that the fund is soon to go broke. As we have tried to point out from time to time, according to the actuarial figures, this just isn't so -- unless we have depression level economic growth in coming decades.

So you don't believe us? Okay, but will you take a former trustee of the fund and ex-labor secretary? In the recent issue of American Prospect Robert Reich states flatly, "Social Security is not endangered." Says Reich the actuarial prediction is "based on the wildly pessimistic assumption that the economy will grow only 1.8 % annually over the next three decades. Crank the economy up just a bit, to a more realistic 2.4% a year (what the actuary gloomily termed the "high option: projection) and the fund is flush for the next 75 years." Incidentally, 2.4% growth is exactly what the White House budget predicts for the next five years.

Here are some other healthy, handy things to do to take your mind off the Great Social Security Scam:

  • Switch from a wage based tax to an income based tax. And make it progressive while you're at it. That way Tim Russert and Cokie Roberts and Pete Peterson will be contributing more to social security and talking less about it. Social Security was a radical idea in New Deal days and a regressive wage tax was one way to make it more palatable to the high rollers of the time.
  • Put the defense budget in a trust fund and let the Pentagon go bust, too. No one but a bunch of politicians said you had to fund Social Security out of a trust fund. And you can tell them that they're wrong.
  • Worry about things that we really can't replace -- like oil -- or that we can't abuse indefinitely -- like the environment.
  • Bear in mind that, according to the GAO, even if you threw 70% of trust fund assets into the stock market, you'd only buy yourself another eleven years or so.
  • In the end, whether there is enough money for Americans in their old age is a matter of political choice, not economic destiny. If we demand that the money be there (rather than spent on missiles or corporate welfare) it can be there; if we allow ourselves to be scared by those who want us to accept a lower standard of living, it won't be.
  • Ask your favorite media why they never tell you things like this.
  • The bottom twenty percent of American senior citizens get roughly 80% of their income from Social Security. Without Social Security, nearly 70% of black elderly and 60% of latino elderly households would be in poverty.

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