Social Security’s Good News is Good News

Posted in: Government

As we try not to drown in the torrent of horrible events that have come to define American life in the twenty-first century, it is understandable that we might lose track of the occasional bit of good news. Indeed, much of my writing over the last few years, especially here on Verdict, has offered blunt explanations of why the bad news is even worse than it looks.

Even though I am worried about matters like climate change and gun violence, I have most often focused on what I think is the most pressing issue facing the United States today: that we will soon no longer live in anything resembling a constitutional republic and will lose the benefits of the rule of law. In a column here just two days ago, I amplified my argument that our days are numbered as a representative democracy, pointing out the key enabling role that far too many Democrats and nominal liberals have played in the Republican-led decline of our political system.

Again, it is even worse than it looks. The hope that maybe a turn in the economy could save the 2022 midterm elections for the Democrats, or that something else might come along (public revulsion at the evidence that the January 6th Select Committee has presented, for example) to prevent Republicans from consummating their decades-long quest to establish permanent minority rule as a one-party autocracy, is nothing more than that … hope. As I argued last summer in what has become one of my most-cited columns, the United States is a “dead democracy walking,” continuing temporarily to appear to function even as the life bleeds out of the body politic. Better “messaging” by Democrats in the coming months is not going to change any of that.

Even so, there is a bit of good news hiding in the weeds, and it is worth celebrating, even though so much else is going wrong. Specifically, the Social Security system—which was already in very good shape, notwithstanding the decades-long drumbeat of doomsaying from those who would scrap the most successful public benefits program in history—has come through the worst stages of the pandemic in very good shape. Even better, Social Security is one of the few programs that post-constitutional Republicans might not bother (or dare) to destroy. This is important.

The Staying Power of Social Security (and Medicare)

In my “Dead Democracy WalkingVerdict column last August, I did offer one prediction that turned out to be completely incorrect: “This is the last time that I expect to describe why America will soon become a one-party autocratic state.” Not even close! It turns out that public discussion about American politics is stubbornly stuck on the idea that everything will turn out just fine, and too many commentators continue to talk about politics here in the comfortable ways that we have always talked about such things.

Most importantly, they continue to take it as given that both parties are willing to accept that they can lose elections fair and square, accept defeat, and come back to try to win the next time. That is manifestly no longer true of the critical mass of Republicans, who have decided that any election that they lose is by definition a stolen election.

I thus did not anticipate how frequently it would be necessary to repeat that this is not normal and is not going to turn out okay. Dozens of columns here and on Dorf on Law demonstrate my dismay that so few people—certainly not the White House and most Democrats, along with most of the mainstream press—are aware that we are about to see a regime change in America. It is not fun to continue to explore the various ways in which reality is being ignored and misunderstood, but it is necessary.

Be that as it may, in that column last August I also described the types of public policy discussions to which I might devote my columns, during and after the death throes of our political order: “Future columns will follow a common structure: identify an issue, stipulate that my analysis is likely to become obsolete when the country’s rule of law finally ends, and then gamely (or, perhaps stubbornly) analyze the identified issue as if the country’s anti-democratic future is not already ordained.”

Importantly, I then added that “even under one-party rule, it is at least possible to imagine better and worse versions of economic or other types of policy, where Republicans themselves might not be in lockstep in supporting the worst option.”

And that is where we are with Social Security. Despite the longstanding conservative disdain for social insurance programs—with generations of Republicans deriding Social Security and Medicare as mere “entitlements,” as if citizens’ paying into a system somehow should not entitle them to expect to receive adequate benefits from that system—Republicans will find it very difficult to kill these two highly popular programs. In 2016, after all, even Donald Trump had the minimal insight necessary to understand that his political base feels very, very entitled to these government benefits.

It is true that lack of democratic accountability in many ways decouples the public’s desires from politicians’ actions. After all, Republicans are already proving that it does not matter how strongly the public supports gun control or abortion rights. When it comes to some issues, however, even the most arrogant and (yes, I will say it) entitled politician treads lightly. There is a reason, for example, that even a ruthless autocrat like Vladimir Putin puts serious effort into keeping the people happy (enough) about key issues to keep himself in power.

With most Republicans currently following Senate Minority Leader Mitch McConnell’s lead by refusing to offer any policy proposals at all in the upcoming elections—which follows their decision in 2020 not even to issue a party platform at their convention—it was notable when Senator Rick Scott (R-FL) announced a Contract-on-America-like set of bullet points a few months ago. Although most of the document was stale culture-wars nonsense, one proposal was very specific. Under Scott’s system, “[a]ll federal legislation sunsets in 5 years.”

When non-Republicans pointed out that Social Security, Medicare, and many other popular programs are based on “federal legislation,” and that it is not possible to run those programs based on Scott’s blithe assertion that, “[i]f a law is worth keeping, Congress can pass it again,” the addled senator started accusing his critics of misrepresenting his plan, even though they were simply pointing out its implications (another of which was a massive tax increase, which Scott also tried to dismiss as a “Democrat talking point”).

It is true that all of this back-and-forth has been happening in the lead-up to the midterms and that Republicans are acting as if America were not a dead democracy walking, which is why they are trying not to alienate too many voters, lest they somehow blow their golden opportunity. Maybe Scott’s now-disavowed implication would appeal to them after the elections, when accountability to the people will be a thing of the past? After all, it is also true that many Republicans to this day would like to privatize Social Security and Medicare. Perhaps, but Scott’s “plan” creates a back door: “Other than essential core functions, government should not be doing anything that the private sector can do better and cheaper.”

So, as long as Social Security and Medicare continue to be popular among the White people to whom the Republicans are now catering, we can easily see how even an extremist like Scott is covering his bases with the possibility of declaring those programs “essential core functions” of government, or possibly that they cannot be done “better and cheaper” in the private sector.

And that latter point is most definitely true—both Social Security and Medicare are much, much less expensive than their private-sector equivalents would be. But I digress.

Now We Can Talk About the Latest Good News

There are very few things that could undermine the public’s abiding and near-universal support for our public retirement systems. One possibility that has loomed over us for the past few years, however, was that the pandemic’s damage to the economy in 2020 and 2021 might have made the finances of Social Security and Medicare look so bad that the privatizers could seize the moment and try to push through a “tough but necessary” privatization or radical reduction in benefits that would devastate middle-class and poor retirees.

Long-time readers of Verdict might recall that I return to the topic of Social Security every year (with very rare exceptions), writing a column after the Trustees of the Social Security and Medicare systems release their annual report each Spring or Summer. Because the two systems are very different—Social Security’s core function being to provide retirement income, Medicare’s to provide single-payer health care to all Americans over age 65—and have very different financial details, I focus only on Social Security in these columns.

My column on this topic from last summer is a good example of the genre, explaining (yet again) why the focus of media attention should not be on the year in which the Social Security trust funds might reach a balance of zero dollars. Among other things, it is important to remember that the trust funds’ balance was always supposed to reach zero dollars; so, although the date on which we will reach that milestone is consequential, that we will get there is not proof that the system is “broken,” “bankrupt,” or that the system will go “belly up.”

In any event, the annual announcement of the updated forecast of the trust funds’ “depletion date” was once a big media event, an occasion for much hand-wringing by self-styled serious thinkers who seized the opportunity to scold Congress for being oh-so irresponsible. As other issues have become more pressing in recent years, that annual orgy of condemnation has thankfully been set aside.

That decline in media attention is also explained by how much more difficult it had become to sustain any sense of outrage or impending doom when the annual reports were so similar every year. The forecast of the depletion date would move by a year in one direction or the other, some other numbers would look slightly different, but nothing much changed.

And that is the good news, because as I noted above, if there were any chance of Social Security becoming vulnerable to rank demagogic attacks, the din that would have accompanied an announcement of bad pandemic-affected numbers could have done the trick. Instead, crickets. Indeed, this year’s annual report announced that under the Trustees’ favored “scenario” (a set of economic assumptions that drives their forecasts), the depletion date of the trust funds is now one year later, in 2035.

This was such non-news that most of the usual suspects in the pundit class (a group that often includes self-identified “centrist” Democrats who echo conservative talking points) did not even bother to write about it. One of the few who did so, in fact, was a conservative who admitted that this year’s report was good news—not missing an opportunity to complain about the “borrow and spend” Congress, of course, but conceding that this is nothing like a crisis.

What Will Happen to Social Security If We Leave It Alone?

Even though this is good news, it is still worth thinking through what might happen if we do reach the point where the trust funds’ balances hit zero. It is important to point out—especially because the Trustees’ themselves are prone to writing their annual reports to emphasize the negative—that one of their three forecast scenarios continues to predict that the depletion date will not be reached until almost 2070 and then sees the trust funds’ balances going back above zero in 2088. Meanwhile, there is serious asymmetry between the more optimistic and the two pessimistic scenarios, with the Trustees’ worst-case forecast reaching zero only three years before the date forecast by their preferred (“intermediate”) scenario. So the three possibilities are that we might reach zero balance in ten years, in thirteen years, or in almost a half-century (and only temporarily).

But let us play on the Trustees’ preferred pessimistic playing field, asking what would happen if we reach 2035 and the trust funds do in fact reach a zero balance. At that point, the Trustees’ report tells us, the system could continue to pay 80 percent of “scheduled” benefits (which, by the way, are adjusted upward for inflation every year) in perpetuity. At worst, then, a supposedly insolvent Social Security program would still be paying four-fifths of the benefits that the “full benefits” formula would otherwise indicate. (Technically, it would not even be insolvent, because under that assumption, the system is not legally required to provide more benefits than it can finance. It would thus be paying exactly what the law promises to pay.)

That would not be good news for beneficiaries, of course, all of whom would surely prefer to get 100 percent of the benefit for which they thought they would qualify. And in fact, even the full-benefit amounts are hardly lavish, which means that we should (as, for example, Senator Elizabeth Warren has proposed) improve Social Security not by cutting benefits but by increasing them in the future, paying to do so through progressive taxation.

A report from the Congressional Research Service from last Fall (which, though based on 2021’s less optimistic forecasts, is certainly representative of the narrow thinking that tends to dominate discussions of Social Security) ran through the options for dealing with that possible shortfall, explaining that Congress could either increase Social Security taxes, cut Social Security benefits, or some combination of the two. Setting aside the irony of “solving” the possible future need to cut Social Security benefits by cutting Social Security benefits, the report repeats the conventional wisdom that Congress must act sooner rather than later to reduce the pain.

But that conventional wisdom should not be the last word. As I argued in the Verdict column from last August that I mentioned above, if we reach 2035 and Congress is faced with the possibility that benefits will be automatically cut by 20 percent, even a post-democratic Congress would blanch. Not only would such a one-time cut in benefits inflict sudden harm on all retirees (who will be more numerous at that time), but the resulting reduction in retirement income—and thus in consumer spending—would seriously harm the economy.

That is why it is actually good for future retirees (that is, today’s workers, including the youngest among them) for Congress to wait to act only when (or if) it is absolutely forced to do so. Preemptive benefit cuts that turn out to be unnecessary will almost certainly never be restored, whereas forcing Congress to come up with more revenue when necessary would make it more likely that it would choose to supplement Social Security’s finances by pulling in funds from sources that are more progressive, such as income or estate taxes.

In the end, the takeaway from today’s discussion is that this year’s Social Security report deprived the would-be privatizers of any potential ammunition to destroy Franklin Delano Roosevelt’s visionary program that continues to protect all generations of Americans. Even better, there is reason to believe that this is one success story that future Republican autocrats might decide to leave alone. With so many reasons to focus on negative news, this is a welcome ray of sunshine.

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