New York Times’ scare tactics on Social Security mask facts
Yesterday, the New York Times’ editorial board relied on half-truths and scare tactics to promote its version of Social Security reform. While some of the editorial is normal big government trope – tax increases to cover Social Security’s coming shortfalls, for example – there are several factual inaccuracies that need correcting.
The editorial misleads right in its first paragraph:
The trustees of Social Security recently reported that the retirement system can pay full benefits until 2035, when it will be able to pay about three-fourths of promised benefits.
The editorial’s language is hair-splittingly correct but fails to inform the reader why it cites 2035 as the year the Trust Fund expires instead of the more commonly stated 2033. While the editorial is technically correct – it split the two components of the Social Security program up in its analysis, and the retirement program alone does run out in 2035 – it fails to explain this to the reader. Since most Americans colloquially call Social Security a “retirement program,” the editorial’s distinction will go unnoticed by most, and thus is misleading.
Next, the editorial claims “Social Security is not a cause of today’s deficits.” This ignores reality:
…Social Security does indeed contribute to federal deficits. This is the result of the unified budget accounting used by the Congressional Budget Office and the White House’s Office of Management & Budget. Because of this accounting system, Social Security’s deficits and surpluses are included in the federal government reported deficits.
Furthermore, for the past two years, the payroll tax holiday has put a deep hole in the federal budget. From the 2013 Social Security trustees report (emphasis added):
The 2012 deficit of tax income relative to cost was $169 billion, and the projected 2013 deficit is $79 billion. The size of the 2012 deficit is largely due to a temporary reduction in the Social Security payroll tax for 2011 and 2012. The legislation establishing the payroll tax reduction also provided for transfers from the General Fund of the Treasury to the trust funds to “replicate to the extent possible” revenues that would have occurred in the absence of the payroll tax reduction. Including these general revenue reimbursements, the 2012 deficit of non-interest income relative to cost was $55 billion, and the projected 2013 deficit is $75 billion.
In other words, in 2012, about $114 billion was taken from the General Fund of the Treasury and shifted over to Social Security as a result of the payroll tax cut.
According to the editorial, Social Security reform “should also include a plan to create good jobs and foster immigration, bolstering the income and number of workers paying into the system.” First, Social Security taxes themselves hurt jobs, as any tax does. Second, regarding the impact of immigration, it is true that having more people in the work force would help the program’s revenues, and push back the day of reckoning. However, the impact of immigration reform for millions of Hispanic immigrants would cause the program to pay out more in benefits. This is for two reasons: first, Hispanics live longer than white and black Americans. Second, most illegal immigrants are low-income workers, and low-income workers receive more in benefits than wealthier Social Security retirees.
Next, the editorial misleads on who received more in benefits:
Targeted cuts — like lower payouts for upper-income recipients who live longer and draw larger benefits — could improve the system’s finances and fairness.
Again, as pointed out above, upper-income recipients do not draw more in benefits than poorer retirees. They do live longer but, on average, their Social Security benefits do not total more than lower-income recipients.
Finally, the Times aims for sympathy for seniors over how poverty-ridden they are:
Most people age 65 and older get two-thirds to all of their income from Social Security.
There you have it, another left-wing editorial pushing ideology over facts. Of course, it’s doubtful the Times will offer a correction – because unlike the editorial changed last week, this one doesn’t criticize a Democratic President.