Propaganda 101 from the Social Security System

While looking for information on an unrelated matter, I came across Frequently Asked Questions About Social Security's Future.

The first thing I noticed was the caveat, IMPORTANT NOTE: The information in this document has been updated to reflect the 2005 Trustees Report. Uh-oh. If the facts don't support the conclusion, change the facts.

What followed was a nearly verbatim recitation of *'s talking points as he springs from "town hall" to "town hall." It's the first time I had seen them set out in detail, which allowed me to see all the lies and half-truths * is using to scare people into radically changing (i.e., destroying) Social Security.

The item I especially paid attention was the threat of "raising payroll taxes":

If Social Security is not changed, payroll taxes will have to be increased, the benefits of today's younger workers will have to be cut, or massive transfers from general revenues will be required. Social Security's Trustees state, "If no action were taken until the combined trust funds become exhausted in 2041, much larger changes would be required. For example, payroll taxes could be raised to finance scheduled benefits fully in every year starting in 2041. In this case, the payroll tax would be increased to 16.66 percent at the point of trust fund exhaustion in 2041 and continue rising to 18.10 percent in 2079. Similarly, benefits could be reduced to the level that is payable with scheduled tax rates in every year beginning in 2041. Under this scenario, benefits would be reduced 26 percent at the point of trust fund exhaustion in 2041, with reductions reaching 32 percent in 2079.” See the 2005 Trustees Report. (emphasis mine)

The lie is that we have to wait until the last moment to fix Social Security. This is the classic "If you wait you'll have to do something drastic, so you better do something drastic now!" scare.

This reminded me of how you steer a huge oil tanker around a rock. A tanker turns so slowly that if you wait until you get to the rock to make the correction you have to take drastic actions to avoid a collision -- and even then a disaster might occur. But if you put in a very small correction you will avoid the problem altogether. For example, a one degree turn executed sixty miles before the rock will cause the tanker to miss it by a mile.

It's called "trim tab."

The half-truth is the threat of "raising payroll taxes." That is different than eliminating the taxable maximum for payroll tax, which does not raise the payroll tax one iota for those already under the cap.

In February of this year two Social Security actuaries wrote a memo to their boss, Chief Actuary Stephen Goss. It was a "what if" analysis of the problem facing the program. Hidden in the actuarial gobbledegook which followed was Table 15, "Eliminate the taxable maximum for payroll tax and for benefit calculation." The result? The Social Security Trust Fund isn't depleted* until 2078!

Now that is a trim tab! And it's base on making only one simple change to the system.

The 2005 Trustees Report makes some changes in the assumptions driving their conclusions, which of course show Social Security hitting the rocks at some time in the near or intermediate future -- which we all know is going to happen. The information from the above memo didn't make it into the report, however. I guess examining possible solutions isn't part of the job description for a Trustee.

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* Exhausting the Trust Fund doesn't mean Social Security is "bankrupt," as * claims. It means the system will have to balance its outgo with its income rather than drawing from savings. Hell, that's how most of us run our household budgets!