Republicans want you to think Social Security has a funding problem. Don't believe them.
Republicans want to make this fight about the budget. But it really comes down to ideology.
The ongoing Republican plot to cut Social Security is shaping up to be a major story. As Dylan Scott has documented at Talking Points Memo, through a totally unnecessary change in accounting rules, Republicans are trying to ensure Social Security Disability Insurance (SSDI) runs short of money in less than two years, which would require a one-fifth cut in benefits.
Most recently, there are hints that Republicans may top up the SSDI fund by merely a little bit, similar to what they have done with the debt ceiling. The point is to create a series of manufactured crises, and each time the SSDI program runs short of money, they can use their leverage to ratchet down Social Security as a whole.
The way Republicans spin all this will be critical. Social Security is very popular, so conservatives will have to avoid the perception that they want to cut it, even though they clearly do. Dispelling their squid-ink nonsense will be crucial in protecting the program.
At National Review, Veronique de Rugy gives us a taste of how conservatives will frame their argument for cuts. "We're broke," says the headline. The SSDI fund "will be empty in a year" (no mention why), and "we can't ignore the issue for much longer." Regular Social Security "is also on an unsustainable path."
She links to a report by Chuck Blahous, an argument against patching up the SSDI fund with money from general Social Security funds. Regular Social Security "now faces a bigger shortfall in both absolute and relative terms than [SSDI]" over the next 75 years, he says, concluding it would be irresponsible to transfer money to the less-solvent program.
What he doesn't mention is that the regular Social Security fund won't come up short until 2034. Plugging the holes in SSDI would advance that date by only about one year, since SSDI is only a small fraction of the overall program. In this country, having some 18 years of breathing space for a government program counts as nearly miraculous.
This complicated talk of actuarial shortfalls and inescapable accounting burdens is meant to obscure the fact that this is a question of ideology, nothing more. Social Security, in contrast to the dread Big Government bureaucracies, is a very simple program that takes in money and kicks it back out again. If the revenue source is insufficient, we could find money someplace else.
The actual worry here, just like any spending program, is whether the cost of the program is getting out of line with the productive capacity of the rest of the economy. All retirement programs take from the currently working and give to the non-working, so we might worry that the elderly and disabled are getting more claims on stuff than the economy can churn out.
Fortunately, as Dean Baker always points out, continuing economic growth keeps expanding our capacity to provide benefits. We can easily "afford" to maintain or expand Social Security, if we want to.
It would be easy to find such money. Indeed, we don't even have to leave the world of retirement policy! We could simply scrap the 401(k) tax credit, which does not work as advertised to increase savings and sends the vast majority of its benefits to the rich. We could then plow the savings into Social Security. The 401(k) credit and similar programs cost something like $100 billion yearly, as compared to the total cost of Social Security of about $820 billion. Hey presto, we're done.
The underlying reality is that opinions on any spending program inescapably rest on a judgment about whether that spending is worthwhile. I believe Social Security is excellent policy and its benefits should be increased. Conservatives like de Rugy and Blahous believe benefits are too high and should be reduced. It's as simple as that.