Phony Social Security "Crisis" Is Fueled by New Report

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critics of personal accounts for Social Security have pointed to the decline in the stock market over the last few years as an argument against allowing younger workers to privately invest a portion of their Social Security taxes. Yet as the new Trustee’s Report shows, the same poor economy that hurts the stock market, hurts Social Security’s ability to pay its benefits.

In the end, there are only three possible solutions to Social Security’s problems. Taxes could be raised (and the Social Security payroll tax would have to be nearly doubled to keep the program afloat). Benefits could be cut. Or younger workers could be allowed to invest privately.

And there we have it: In two easy steps, we’ve returned to the most cherished--and most discredited--domestic policy objective of the Bush Administration, the privatization of Social Security.

The real worry now, however, isn't the likes of Cato, but the Democrats' apparent willingness to succumb to the heated rhetoric of the phony crisis. Obama has several times made references to "entitlement reform." And as Roll Call reported last week:

In a year already jam-packed with major legislative initiatives, House Majority Leader Steny Hoyer (D-Md.) is breathing new life into the idea of tackling Social Security reform….Hoyer signaled that Democratic leaders may take steps to act on Social Security reform in the fall after Congress advances its two biggest priorities: health care reform and climate change legislation.

“Of our entitlement programs, I believe we would have the easiest challenge in reforming Social Security,” Hoyer said. “Frankly, I believe Social Security is not very difficult mathematically. It may be difficult politically, but not mathematically.”

The Washington Post confirmed that Hoyer is looking to create ”a bipartisan consensus” for “overhauling the Social Security system.” Democrats, the Post reported, ”have found a willing partner in the Senate,” where South Carolina’s Lindsey Graham “has stated his desire to work with President Obama to make changes to keep Social Security solvent.” Even Graham, a longtime supporter of Social Security privatization, is now admitting that dog won’t hunt. Instead, he presents Social Security reform as a “math problem”: “You can do a combination of things, give a little here and give a little there, and get it done,”  he said. 

Anyone who supports the program that lifted millions of elders out of poverty should  be concerned by the ongoing disconnect between the “reform” rhetoric and Social Security’s actual fiscal soundness--and by where it all might lead. Following Hoyer’s announcement, the National Committee to Protect Social Security and Medicare commented: 

given the long list of critical challenges this nation faces right now…it’s hard to imagine why Social Security would share space at the top of the legislative priority list.…Some worry Social Security will be used as a bargaining chip in the healthcare debate, others see this as part of ongoing efforts to balance the budget through entitlement program cuts.

William Greider, in his comprehensive takedown of the Social Security insolvency myth, issued a more explicit warning: 

Governing elites in Washington and Wall Street have devised a fiendishly clever “grand bargain” they want President Obama to embrace in the name of “fiscal responsibility.” The government, they argue, having spent billions on bailing out the banks, can recover its costs by looting the Social Security system.

By now, we’re all used to witnessing these kinds of bait-and-switch tactics. But according to yet another Washington myth, we’re not supposed to see them coming from the Democrats.

A version of this post also appears on Unsilent Generation, James Ridgeway's blog on the politics of aging.