Periodic reminder: This is day 27,757 of the Social Security non-crisis

With all the rhetoric of Social Security in crisis, I only wish my 401(k) kept its value as well.

This month, I’ve been reading the usual rhetoric about how Social Security is in crisis. I only wish my 401(k) were in the same crisis. So it’s time to update an old column.

Seventy-six years ago this Sunday, President Roosevelt’s signed the Social Security Act into law. According to STATA’s date difference calculator, this is day 27,757 of the Social Security non-crisis. Meanwhile, my 401(k) has dropped by about twelve percent in the past month. Yeah I’m not happy about that. The only things that didn’t tank were my U.S. treasuries. At a scary economic moment like this, I’m glad my future retirement is backed by the full faith and credit of the United States. I’m glad that my parents and my disabled brother-in-law still reliably receive their monthly benefits.

Not to be goulish, but I’m also glad that Social Security will protect my family if something happens to me. The program provides the most generous life- and disability insurance policy most Americans will ever own. Most of us never even think about this—unless tragedy strikes, and we need it, as happened to my own family. It’s available to everyone regardless of race, religion, age, or health status from an insurer that will never go bankrupt or rescind your policy based on some fine-print sleazy thing. That’s the beauty of social insurance. No private insurer offers anything close to that. I doubt that one could.

No doubt–the program requires further tinkering to maintain long-run fiscal balance. This poses a political challenge, but the rhetoric of crisis is unfounded. I’d like to see some other changes, too, for example to raise benefits to low-income widows who need more help.

Reasonable tax increases and benefit adjustments can cover this shortfall. As Paul Krugman observes, the required Social Security fixes are much smaller than the increase in our defense budget after 2001. The Bush tax cuts and the fiscally irresponsible structure of Medicare part D cut much larger holes in the federal budget.

Social Security is probably the best thing American government has ever done for literally hundreds of millions of working people and their families. The program is going strong. I wish I could say the same about the rest of my portfolio….

Author: Harold Pollack

Harold Pollack is Helen Ross Professor of Social Service Administration at the University of Chicago. He has served on three expert committees of the National Academies of Science. His recent research appears in such journals as Addiction, Journal of the American Medical Association, and American Journal of Public Health. He writes regularly on HIV prevention, crime and drug policy, health reform, and disability policy for American Prospect, tnr.com, and other news outlets. His essay, "Lessons from an Emergency Room Nightmare" was selected for the collection The Best American Medical Writing, 2009. He recently participated, with zero critical acclaim, in the University of Chicago's annual Latke-Hamentaschen debate.

5 thoughts on “Periodic reminder: This is day 27,757 of the Social Security non-crisis”

  1. Social Security is not a very generous disability policy. Or to be more accurate, it is extremely generous to its beneficiaries, but extremely restrictive in qualifying its beneficiaries. You don’t get social security disability unless you can’t hold any job.

    Let’s say you’re an office worker and suffer a stroke that impairs your higher cognitive function down to–oh, let’s say IQ 80. But this stroke does nothing to your motor or perceptual skills. You’re still good to go at McDonald’s, but you’re not fit for the office job that pays 10 times as much. Social Security doesn’t recognize this.

    So please don’t throw away your disability policy, just because Social Security is around.

  2. The only fundamental challenge to social security is that life expectancy at age 65 has gone up about one year per decade since World War II.
    I sometimes wonder therefore if the obesity epidemic will save the program.

  3. The fundamental challenge to Social Security is NOT that “life expectancy at age 65 has gone up about one year per decade since World War II.” The actuarial tables that Social Security uses actually take this factor into account. Life expectancy has nothing to do with any projected Social Security shortfall.

    The explanation for the shortfall — the program will only be able to pay roughly four-fifths of scheduled benefits after 2037 — is much simpler: Social Security’s actuaries didn’t see the wild swing in income inequality that came about since 1983. Income has been largely flat for the middle class while rising for the wealthy. Social Security taxes apply only to the first $106,000, so increases for the rich don’t contribute to the trust fund. And compensation increases that come in the form of more expensive health care benefits are also not subject to Social Security taxes.

    One should also keep in mind that this projected shortfall only arises if one uses the “moderate” projection of future Social Security revenues. This projection is actually somewhat conservative, and historically, the actual returns have been closer to the “optimistic” projection.

  4. GOP obstructionism on the debt ceiling caused S&P to downgrade our credit rating, which caused the stock market to go crazy, which has reduced hundreds of thousands of Americans’ 401ks and retirement by 10-15% in the last week or so (including my elderly parents’, which dropped by 9%.) For a group who claims to understand economics, and to want to fix our economy, and to care about Americans, the GOP sure are doing a bad job.

    Can we repeat this over and over? The GOP are not helping. They are making Americans’ lives worse. It needs to be as clear as that.

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