McClatchy DC Logo

Social Security not in a crisis, but does face long term problems | McClatchy Washington Bureau

×
    • Customer Service
    • Mobile & Apps
    • Contact Us
    • Newsletters
    • Subscriber Services

    • All White House
    • Russia
    • All Congress
    • Budget
    • All Justice
    • Supreme Court
    • DOJ
    • Criminal Justice
    • All Elections
    • Campaigns
    • Midterms
    • The Influencer Series
    • All Policy
    • National Security
    • Guantanamo
    • Environment
    • Climate
    • Energy
    • Water Rights
    • Guns
    • Poverty
    • Health Care
    • Immigration
    • Trade
    • Civil Rights
    • Agriculture
    • Technology
    • Cybersecurity
    • All Nation & World
    • National
    • Regional
    • The East
    • The West
    • The Midwest
    • The South
    • World
    • Diplomacy
    • Latin America
    • Investigations
  • Podcasts
    • All Opinion
    • Political Cartoons

  • Our Newsrooms

Latest News

Social Security not in a crisis, but does face long term problems

Steven Thomma - Knight Ridder Newspapers

    ORDER REPRINT →

January 11, 2005 03:00 AM

WASHINGTON—The brewing fight over reforming Social Security starts with a simple point of contention: is the system facing a crisis?

President Bush says it is. He says it's going broke, that radical steps must be taken and they must be taken now. "By the time today's workers who are in their mid-20s begin to retire, the system will be bankrupt," Bush said last week. "Flat bust, bankrupt, unless the United States Congress has got the willingness to act now."

Others, such as the American Association of Retired Persons, counter that the pension program isn't in peril and that long term problems can be easily fixed with a few small adjustments. "Social Security is not in danger of going broke," said AARP chief executive William Novelli.

Facing a coming barrage of claims backed up by costly and slick advertising, but lacking a degree in accounting, what's the average American to think? This much is clear: like any political campaign, each side is exaggerating.

SIGN UP

Social Security is not in a crisis. Full checks will keep going out for decades even without changes. But it does face problems. The rest of the government—or taxpayers—could be squeezed to pay off debts to Social Security starting in 14 years. And benefits could have to be cut or taxes raised starting in 38 years.

Deciding how much trouble the program faces is critical.

Bush is working to build political support in Congress and the country to cut benefits and allow younger workers to make up the difference with personal savings built with some of their own Social Security taxes. Newt Gingrich, a former House speaker and influential Republican strategist, said last week that he does not think there is enough support in the country to cut benefits.

Yet the more Americans think the popular pension is headed off a cliff, the more they could support his dramatic change of course.

"We need to establish in the public mind a key fiscal fact: right now we are on an unsustainable course," White House political strategist Peter Wehner wrote in a recent memo to allied conservative groups. "The reality needs to be seared into the public consciousness."

Bush is leading the drumbeat, starting with a series of speeches and staged events and building to a prime spot in his upcoming State of the Union Speech. "The crisis is now," he said recently.

Yet the facts show there is no imminent threat to Social Security.

Even without a single change, the checks will continue to go out as scheduled at least until 2042, perhaps 2052. Even then, the system could afford to pay 73 percent of benefits. And under one of three projections envisioned by the trustees who run the program, it could even afford to keep paying full benefits AND start amassing a big surplus.

"There is no crisis now," said Bernard Wasow, a senior fellow at the Century Foundation, a Washington think tank that opposes Bush's plans. "The system is scheduled to keep building up reserves for the next 14 years and is not expected to exhaust its savings until somewhere between 2042 and 2052. Most people would hardly call that a crisis."

Indeed, the Social Security system is continuing to collect more in taxes now than it pays out in benefits. That ends in 2018, when the program starts paying out more in benefits to a retiring Baby Boom generation than it collects in taxes. But it then will start cashing in $1.5 trillion in Treasury bonds it holds and thus still be able to pay full benefits until sometime between 2042 and 2052.

Some critics of the president's plan argue that long-term economic forecasts by the government are notoriously inaccurate and that the most-often cited trustee scenario is built on a series of conservative assumptions.

A little better economy over the next several decades would keep Social Security in surpluses for decades to come under the most optimistic of three forecasts offered by the program's trustees.

For example, one key to the optimistic forecast would be Americans improving their productivity by an average of 1.9 percent a year over the next 75 years.

That increase in productivity would be slightly better than the 1.8 percent a year average from 1960 to 2000, but slightly below the 2 percent a year average from 1993 to 2003.

Still, Social Security does have problems—or the rest of the government has problems.

For decades, the federal government has borrowed from the Social Security "trust fund" surplus to pay for hundreds of billions of dollars in government services. Starting in 2018, when the cost of benefits will begin to exceed payroll tax revenue, that bill will come due and Social Security will demand repayment.

That in turn will require the rest of the government to raise taxes, cut spending, or pile on more debt to pay off the debt to Social Security.

Moreover, two out of three forecasts by the pension's trustees state that benefits would have to be cut by 27 percent somewhere between 2032 and 2042 unless something is changed before that.

"This is a huge problem," said Alison Fraser, an analyst at the Heritage Foundation, a Washington think tank that supports bold changes in Social Security.

"It's very important that people understand there is a problem and that you can't solve it by tinkering around the margins."

Whether it's a crisis now or threatens to become one, said Fraser, is irrelevant. "If we wait till it's a crisis, it will be extremely difficult to solve without putting the pinch on a lot of innocent people."

Said White House spokesman Scott McClellan: "We can debate words like crisis...but I think it's very clear that this is a significant problem facing the American people. ... Now is the time to act."

———

Information on the Web is available at www.aarp.org, www.heritage.org, www.ssa.gov, www.tcf.org, www.whitehouse.gov

———

(c) 2005, Knight Ridder/Tribune Information Services.

PHOTOS (from KRT Photo Service, 202-383-6099): SOCIALSECURITY

GRAPHIC (from KRT Graphics, 202-383-6064): 20050111 SOCIALSECURITY

Need to map

Related stories from McClatchy DC

latest-news

1013696

May 24, 2007 02:24 AM

  Comments  

Videos

Democrats announce Green New Deal

Sen. McConnell says Trump will sign spending bill and declare a national emergency

View More Video

Trending Stories

Jared Kushner privately working on reshaping legal immigration

February 20, 2019 05:00 PM

Trump slams California’s ‘fast train’ as Gavin Newsom leads 16 states suing over border wall

February 19, 2019 10:46 AM

Stacey Abrams appearance at voting rights hearing has political overtones, GOP says

February 19, 2019 10:20 AM

VP Mike Pence plans visit to South Carolina to tour Opportunity Zones with Tim Scott

February 19, 2019 05:22 PM

Why Trump’s tweets could be used against him in California’s border emergency lawsuit

February 19, 2019 05:15 PM

Read Next

Fatalities from police chases climbing, could be higher than records indicate

Investigations

Fatalities from police chases climbing, could be higher than records indicate

By Thomas Frank

    ORDER REPRINT →

February 21, 2019 12:00 AM

At least 416 people were killed in police chases in 2017, the fourth straight year that the number of people killed during police pursuits went up

KEEP READING

MORE LATEST NEWS

Republicans rally around Trump after McCabe asserts DOJ discussed removing the president

Congress

Republicans rally around Trump after McCabe asserts DOJ discussed removing the president

February 20, 2019 04:53 PM
Massive public lands bill expected to receive easy approval in the House

Congress

Massive public lands bill expected to receive easy approval in the House

February 20, 2019 12:54 PM
‘You’re my guy’: Top Senate Dem urges Jaime Harrison to challenge Lindsey Graham

Elections

‘You’re my guy’: Top Senate Dem urges Jaime Harrison to challenge Lindsey Graham

February 20, 2019 12:12 PM
VP Mike Pence plans visit to South Carolina to tour Opportunity Zones with Tim Scott

Congress

VP Mike Pence plans visit to South Carolina to tour Opportunity Zones with Tim Scott

February 19, 2019 05:22 PM

Congress

Stacey Abrams appearance at voting rights hearing has political overtones, GOP says

February 19, 2019 10:20 AM
On offshore drilling, Mark Sanford and Joe Cunningham find their legacies are linked

Congress

On offshore drilling, Mark Sanford and Joe Cunningham find their legacies are linked

February 15, 2019 05:00 AM
Take Us With You

Real-time updates and all local stories you want right in the palm of your hand.

Icon for mobile apps

McClatchy Washington Bureau App

View Newsletters

Subscriptions
  • Newsletters
Learn More
  • Customer Service
  • Securely Share News Tips
  • Contact Us
Advertising
  • Advertise With Us
Copyright
Privacy Policy
Terms of Service


Back to Story