Does Fixing Social Security Matter?

| Fri Nov. 19, 2010 4:00 AM PST

Here is Atrios a few days ago on plans to shore up Social Security's finances:

The other fantasy is that if you pass some sort of plan which gets Social Security in surplus for the next 75 years according to the SSA then you get credit for "saving" Social Security and that the issue will be then off the table until the end of time. What will happen in practice is that the trustees will inevitably make minor and completely reasonable tweaks to the assumptions underlying their projections so they can once again have the trio of "nightmare," "middle ground," and "everything's awesome" scenarios, with the middle ground scenario showing problems at some point in the future. Then the pain caucus will be back to tell us just how much granny needs to starve and Wall Street will return to siphon up all the money into their gaping maws.

This is a pretty common sentiment in the progressive community, but I really don't think it's right. It's true that a certain contingent of conservatives will never give up on attacking Social Security. They'll release white papers, write periodic op-eds for the Wall Street Journal, broadcast Facebook rants about Ponzi schemes to the faithful, and agitate forever for privatization. This will never stop.

But it won't gain any traction if the official reports show that Social Security is solvent. The fact is that the middle scenario of the Social Security trustees hasn't changed dramatically over the years. In 1985, they projected that outlays would exceed revenue by 2.5 percent of taxable earnings in 2060. Last year, the forecast for 2060 showed an imbalance of about 3.5 percent of taxable earnings:

So yes: The trustees make tweaks, and those tweaks have caused the lines to move up and down over the years. But not by a huge amount. Put together a plan that closes the long-term gap on a pay-as-you-go basis—that is, without playing trust-fund games this time—and it will probably remain in pretty good shape for decades at a minimum.

That won't satisfy Cato or the Heritage Foundation, but they aren't the real opinion movers on this. The Beltway consensus is formed much more by the Washington Post editorial page and the Pete Peterson folks, and they've always been willing to accept the trustees' projections as meaningful. So once the trustees produce a chart showing Social Security in balance, all the oxygen gets taken out of the debate. The privatizers won't give up their crusade, but nobody will be listening anymore. Privatization is fundamentally unpopular, and it only edges its way into the public discourse if it can plausibly appeal to an oncoming crisis. Remove the crisis, and they've got nothing left.

This is why progressives should be more open to trying to cut a Social Security deal. It might not work, of course, but with deficit reduction in the air it's worth trying. Right now, we have multiple deficit reduction plans on the table that provide reasonable starting points for discussion; none of the plans involve privatization, and a bipartisan deal would put a stake through privatization for good; it would remove a distraction and allow us to devote our attention to more important things; and it would be good for the country and good for Social Security beneficiaries to shore up the program permanently and put the doom mongers out of business. Better now than when President Palin is in office.

Front page image courtesy of Flickr user Seth Anderson.

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