While Republicans and Democrats haggled over budget deficits last year, the Social Security system quietly went "cash negative" — a "treacherous milestone," says Lori Montgomery in The Washington Post. For almost all of its 75-year history, the program has collected more in payroll taxes than it paid out in benefits. But now, with the economy sinking and baby boomers beginning to retire, Social Security is "sucking money out of the Treasury." Is the program really in dire straits?
This is a phony crisis: "This 'treacherous milestone' is entirely the Post's invention," says Dean Baker at the Center for Economic Policy and Research. Social Security isn't broke — it has $2.6 trillion in a trust fund built up from decades of surpluses, "so it is nowhere close to being unable to pay benefits." This is exactly how the system was supposed to work when taxes fell short of the system's costs, which is what happened last year.
"Washington Post discards all journalistic standards in attack on Social Security"
Critics want to have it both ways: By law, Social Security is funded by today's payroll taxes and "by accumulated past surpluses," says Paul Krugman at The New York Times. If payroll taxes fall short one year, past surpluses in the trust fund cover the difference. If, alternatively, you "think about Social Security as just part of the federal budget," there are no surpluses or deficits. In that scenario, social Security isn't required to break even any more than the Defense Department is. "What you can't do is insist that the trust fund is meaningless because [Social Security] is just part of the budget, then claim that some crisis arises when receipts fall short of payments, because [Social Security] is a standalone program." That's nonsense.
"Social Security bait and switch, a continuing series"
But Social Security clearly has a problem: "Social Security was never meant to fund decades of retirement," says the Lonely Conservative. When the program was set up in the 1930s, people only lived to be about 65. But today, "65 is the new 45, with many people living into their 90s." Who exactly is going to pay for these retirement checks as people continue living longer and longer? If we don't take drastic action to fix it, Social Security will inevitably go broke.
"Hey, whatever happened to that Social Security trust fund?"
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- How Israel's hawks intimidated and silenced the last remnants of the anti-war left
- Why you should stop believing in evolution
- Why China thinks it could defeat the U.S. in battle
- What you need to know before you support the police in Ferguson
- Welcome to the age of ambivalent feminism
- The secret to handling pressure like astronauts, Navy SEALs, and samurai
- The big policy question libertarians can't answer
- Why your employer should clean your house and do your laundry
- The real lesson of Rick Perry's mug shot
- What is Molly? Everything you need to know about the party drug
Subscribe to the Week