Republican Fear-Mongering on Social Security Is Nothing New
by Neil H. Buchanan
The political news continues to be favorable for President Biden and Democrats, as Republicans continue to flail in response to his calling them out on their longstanding (and that means longstanding) attacks on Social Security and Medicare. In his State of the Union address, Biden specifically criticized the plan published by Florida Senator Rick Scott -- who, we should not forget, was once forced to resign as CEO of a company that was convicted of 14 felony counts of defrauding Medicare, in what was at the time the largest Medicare fraud in history -- but of course it has not been difficult to find examples of Republicans saying things that they are now frantically trying to explain away.
As I discussed in my column yesterday, one prominent example of this is Utah Senator Mike Lee, who explicitly and directly stated in a speech in 2010 that he would "pull [Social Security] up by the roots and get rid of it." This was not a momentary lapse of reason, because Lee was the surprise nominee when his state's Republican nominating convention that year turned against incumbent Senator Bob Bennett for having had the nerve to vote in favor of saving the global financial system from a complete meltdown (thus helping to prevent the Great Recession from becoming the Second Great Depression). Lee was one of the original wild-eyed Tea Party darlings.
Lee, of course, is now saying that his remarks were taken "out of context." As far as I can tell, however, that merely means that he said those words in a context in which he would politically benefit from them, whereas now he would be politically harmed by them, so he wants to change the subject. It is similar to the time (also in 2010) when Kentucky's Rand Paul went on Rachel Maddow's show and spent almost the entire 20-minute interview arguing that the "public accommodations" provision (Title II) of the Civil Rights Act of 1964 is a violation of people's freedom. When that position became politically inconvenient, Paul's defenders claimed that Maddow had "ambushed him." Whatever else one might say about her, Maddow is as far from an ambush journalist as one can get.
The point is that Republicans hate it when they say things that they know are going to go over well with their target audience but are suddenly confronted with the unpopularity of their insular views. Mitt Romney's infamously disparaging comments in 2012 about the poors -- who in Romney's telling “believe that they are victims,” have an undeserved belief
“that they are entitled to health care, to food, to housing, to you name
it,” and can never be convinced to take “personal
responsibility and care for their lives” -- were delivered to a private audience of appreciative wealthy donors. When the recording of his remarks was released publicly, it did not go well for Romney.
On Social Security, it is especially easy to find Republicans saying things that they now would like to bury. Here, however, I want to talk about the less explosive kinds of comments that Republicans make that nonetheless show how willing they are to try to distort the public's understanding. Not Lee-style "by the roots" stuff, but in their own way even more of a problem. If you can convince people that the system is already doomed, can you also convince them to let you destroy it preemptively? Republicans certainly seem to think so.
As a side note, I ended yesterday's column with a long critique of The New York Times's coverage of government budgeting and the national debt. As I noted, even though these articles are not published on the Opinion page, they are infused with a tendentious argument that supports anti-government conservative orthodoxy. And sure enough, as soon as the Congressional Budget Office (CBO) released its latest required periodic update to its fiscal forecasts yesterday, The Times was right there with a screaming headline over an article written by their two in-house debt scolds, Jim Tankersley and Alan Rappeport. I do not recommend the article, which the editors at The Times kept toward the top of their website for at least twelve hours, long after The Washington Post's much less inflammatory piece on the CBO's report had been moved far down their front page. The debt-panic infestation at The Times is not limited to its two business reporters but extends to its editors as well.
As a side side note, however, both of the top US newspapers happily conflated the debt ceiling and the debt/deficit. The Post's headline, for example, put it this way: "U.S. faces possible default between July and September as deficit rises." As Professor Dorf and I have said many times, those two things are not at all related, yet the press has become ever more insistent on treating them as the same thing. Oy.
But back to Social Security and Medicare. In addition to Senators Scott and Lee, both of whom have said that they would like to end those programs in different ways (Scott's claim that the programs could be re-authorized with new votes every five years being laughably dishonest), their party colleagues in the upper chamber are also on the record undermining these two highly popular programs.
The easiest comments to ridicule (and that is saying a lot) are unsurprisingly emanating from Wisconsin's Ron Johnson, who has emerged as the Senate's version of the Boebert/Gohmert/Greene wingnut caucus, willing to say whatever comes to mind and then stick with it. A Post news article last week included this: "Johnson argued during [an] interview that the current structure of Social Security is unsustainable. 'It’s a legal Ponzi scheme,' Johnson said, echoing an argument he has made for years."
I should say that Johnson is hardly the only opponent of Social Security who has tried to smear it with the "Ponzi scheme" label, but that is the kind of non-argument that used to be heard on the fringes of the hard-right libertarian crowd. In that interview, Johnson said: "That doesn’t mean cutting Social Security. But it does mean prioritizing." Which means cutting Social Security. And honestly, if the government were running a Ponzi scheme, it should be shut down immediately, not (as Johnson has tried to dress it up) by "moving it on-budget."
The closest that anyone has ever come to making a semi-defensible connection between Social Security and Ponzi schemes is to say that Social Security has workers paying money into the system and then sends that money out to beneficiaries. See, just like Bernie Madoff! The problem is that private savings accounts work in exactly the same way. Banks and investment funds do not put our deposited money in vaults (or lockboxes). They take the money and immediately lend it out to other people, charging a higher rate of interest on those loans than they pay on the savers' accounts.
That is not a Ponzi scheme. It is the business model of the whole of modern finance. And just as the payouts on private financial investments might need to be adjusted if the finance companies' returns fall short of expectations, so is Social Security's payout structure contingent on the performance of the underlying economic activity that supports its funding stream.
Put differently, both the Social Security system and private retirement savings can be structured in ways that are sustainable, but the economic and actuarial forecasts on which they rely must of course be based on unknown future outcomes that might change the picture over time. A Ponzi scheme can continue only if more and more suckers are drawn into the game, with the ultimate collapse of the scheme being merely a matter of time, because at some point the house of cards falls apart as people realize that there is nothing supporting the promised returns.
I have surely given that argument more air time than it deserves, but no matter. I now, however, want to emphasize an argument that is much more insidious and is, quite surprisingly, partly fed by the public information that the Social Security system itself publishes. Every year, Social Security's administrators issue annual statements for everyone who has ever worked and thus paid money into the system. The system's website provides a nice sample statement (for an imaginary American named Wanda Worker, who was born in 1996 and lives on Anywhere Avenue in Maintown USA).
Such personalized statements, which are based on each current or former worker's earnings record to date along with their projected future earnings, are created to provide people with a decent guess about how much they will receive in benefits. Benefits depend on when one retires, and the statement also provides information about survivors' benefits and disability coverage. In Wanda's case, the projection is that she will receive $1,229 per month in (inflation-protected) benefits if she retires at her full retirement age (67, not 65) in 2063.
The statement, however, also includes a bold-faced paragraph immediately below the estimates of Wanda's various possible benefits:
* Your estimated benefits are based on current law. Congress has made changes to the law in the past and can do so at any time. The law governing benefit amounts may change because, by 2035, the payroll taxes collected will be enough to pay only about 80 percent of scheduled benefits.
The first sentence is true, and it should be read as a warning not to let the likes of Scott, Lee, Johnson, and their colleagues mess with Social Security based on lies. The second sentence, however, at the very least strongly suggests that the only reason that benefits might change is "because" -- not if, but because -- payroll taxes will only cover 80 percent of "scheduled benefits." Wanda, therefore, is supposed to say to herself: "Hmmm, so my statement says in large print at the top of page 1 that I'll reeive $1229/month, but now it says that I'll only get 80 precent of that."
As I noted in yesterday's column, it is possible that Social Security benefits will need to be adjusted in the future (in 2035 or some other year), depending on what happens to the economy over time. But this warning makes it seem that this is a done deal. This misleading statement, however, should be understood at least to mean this: "Even under a pessimistic forecast that we're pretending is a sure thing, Wanda Worker will receive $983.20 [80% of $1229] per month throughout her retirement, adjusted for inflation and free of default risk."
Would Wanda prefer to receive the "full" $1229? Of course, but even that is pretty low, which is why I argued yesterday that congressional intervention should be on the upside -- that is, that Congress should increase benefits, not decrease them. After all, as the bold-faced statement says: "Congress has made changes to the law in the past and can do so at any time. The law governing benefit amounts may change." So why not change it for the better?
I should add that the provenance of this disinformative paragraph is unclear. I once asked a research assistant to track down when and why it was added to the annual statements, but there was simply no publicly available information on that question. It is not even clear whether this was internally generated by the Social Security trustees, by a former presidential administration, or simply by a rogue employee.
But the point is that Republicans are using that paragraph to suggest dishonestly that the system will go away entirely. Again, what the paragraph actually says is that, even if the system were forced by bad economic performance to pay less than "full retirement benefits," payments would still be large enough to be the difference between starving to death or living on a very modest income.
The system, in short, is not going anywhere unless Republicans in Congress mess with it. Or Democrats. In what should be remembered as a shameful episode during his presidency, Barack Obama offered to cut future Social Security benefits in exchange for Republicans' agreeing to increase some taxes. I am happy to say that they refused -- for the wrong reason, to be sure, but still the better outcome.
So what do other Republicans say, and how do they play on and amplify this suggestion that the system is doomed? Consider two of their leaders in the Senate. Back when he was serving in the House in 2012, South Carolina's Tim Scott (no relation to Florida's Senator Scott) said this: "There’s no doubt that we have to wrestle this beast to the ground and do the right thing. The fact is that if we don’t start having a real conversation about people in their 40s and younger about the transformation of the system, it won’t be available for folks now in their 20s and 30s.”
That, however, is the opposite of "the fact." The fact is that the system will be available for folks now in their 20s and 30s, unless people like the Scotts have a chance to engineer "the transformation of the system." If we never have a conversation, "real" or otherwise, about Social Security, it will be there for today's young people and generations who follow.
That quote from Tim Scott appeared in a Post piece last week, which noted that former House Speaker Paul Ryan famously tried over and over again to attack Social Security and Medicare. He was supported in those efforts not only by then-Rep. Scott but by now-governors Kristi Noem (South Dakota) and Ron DeSantis (Florida, which has no citizens with an interest in Social Secuirty or Medicare).
Finally, consider the second-ranking senator in the Republican caucus (Mitch McConnell's heir apparent), John Thune of South Dakota. For anyone who might imagine that it is unfair to quote politicians' views from 2012, how does last Wednesday sound? Echoing Tim Scott's comments, Thune professed in an interview not to want to cut Social Security, but:
We spend more than we take in every year,. That doesn’t mean you have to cut things, but there are a lot of younger Americans today who understand that, if something isn’t done, Social Security isn’t going to be around for them.
If "a lot of younger Americans today ... understand" that, then they misunderstand the situation. It is not their fault, because politicians like Thune keep talking about Social Security as if it is doomed. At most, however, the benefits will be subject to a one-time downward revision -- a reduction that should be unnecessary and resisted, but which in no way resembles Thune's claim that the system "isn’t going to be around."
But this is a party that has spent decades calling Social Security "insolvent," claiming that it will soon go bankrupt, and more. George W. Bush sneered at the Trust Fund as just a piece of paper in a file cabinet (as opposed to any other financial obligation?). They have been trying to convince younger people to give up on Social Security and Medicare, which would allow conservatives to get rid of these programs, which they have opposed since each was created.
Republicans want to claim that Biden is lying when he says that some of them have talked about sunsetting Social Security and Medicare, even though that statement does not even require a judgment call by a fact-checker. The larger reality is that it is not only Rick Scott who has been pushing a doom-and-gloom story to undermine these two essential legislative achievements. Other Republicans might want to distance themselves from him now, but this what they have stood for forever.