There’s one number that poses the biggest threat to Social Security as we know it.
It isn’t $22.4 trillion — the current estimate of the funding hole, according to the program’s trustees.
It isn’t 2034 — the year the trust fund is expected to run out of money.
And it isn’t 21% — the amount that benefits would have to be cut if that happened, and there had been no change to the law.
The scariest number may be 71%. That astonishing figure, from a new poll, is how many have been persuaded that cuts to Social Security — potentially deep cuts — are either likely or inevitable. And that wasn’t from a biased poll conducted by a pressure group. Or a fly-by-night poll by a startup. It came from a comprehensive survey of 10,000 people conducted by the Harris Poll on behalf of the respected Transamerica Center for Retirement Studies.
“Seven in 10 people (71 percent) are concerned that Social Security will not be there for them when they are ready to retire,” Transamerica wrote. Half of those, 35%, said that cuts to Social Security are their single greatest retirement fear — far more than, say, fear of isolation or getting dementia.
This may help explain why a remarkable 42% of those polled say they think future generations of Americans will be worse off in retirement than those today. The same percentage expect to retire at 70 or later, and half expect to work after retiring.
This isn’t an outlier poll, either. Others have found comparable results.
Score another victory for the Resistance Is Futile campaign — the quiet effort to persuade Americans to accept cuts to Social Security that they don’t want, and that the program doesn’t need.
If our national-pension poachers get their way, it will be because of this.
“Resistance is futile” is one of the oldest propaganda tricks around. After all, you can’t fight the inevitable, right?
None of this is remotely needed. It’s pure spin.
America today is richer than it has ever been, by an order of magnitude. Household net worth is more than $140 trillion. In constant dollars — in other words, after deducting the effects of consumer price inflation — that is 50% higher than it was a decade ago, and twice what it was at the end of 1999. Annual gross domestic product per person is 50% higher than it was at the turn of the millennium — again, in constant, inflation-adjusted terms.
The idea that Social Security can’t be sustained in its current form is preposterous. As is the idea that somehow future generations of retirees should be worse off. Or that rising life expectancy is a curse rather than a blessing.
Funding wouldn’t be an issue if, for example, we closed the Billionaire Boondoggles, such as the one giving special low-tax rates to people in private equity and venture capital or the one imposing almost no taxes at all the super tycoons.
If you want to know why these outrageous boondoggles persist, ask yourself who makes up the political-donor class.
Funding would be a lot less of a problem if we just did more to catch tax cheats, who scam the rest of us to the value of hundreds of billions a year. Government watchdog the GAO says tax cheats — the “tax gap,” according to the euphemism — cost us all about 15% of federal revenues each year, which would be worth nearly $700 billion in the tax year that just ended.
Meanwhile Social Security’s (apolitical) chief actuary, Steven Goss, recently pointed out that the funding shortfall would be much smaller if wage inequality hadn’t exploded over the past 40 years.
None of this means that the program doesn’t face major challenges. Average life expectancy at 65 is now 20 years, up from around 12 back when the program was just getting started. By the middle of the next decade, there are expected to be about 43 beneficiaries for every covered worker. The figure in 2000 was 29 workers.
None of the possible fixes would be politically easy, whether it involves raising payroll taxes, levying them on higher wages, cutting benefits, or raising the retirement age (which is also a cut in benefits). But doing nothing, and letting benefits plunge by 20% next decade, would be immeasurably worse – politically, socially and economically. Some 40% of retirees rely on Social Security for all of their income.
The battle lines are drawn: Make the political donor class pay taxes, or steal pensions from middle-class retirees. You can see why those in favor of stealing pensions would want to pretend it was “inevitable.”
