Social Security and Medicare: Behind the Numbers and
the Spin

Also: 2012 Social Security Trustees Report Overview

===

Social Security and Medicare: Behind the Numbers and
the Spin

By Richard (RJ) Eskow
Campaign for America's Future
April 23, 2012

http://www.ourfuture.org/blog-entry/2012041723/social-security-and-medicare-behind-numbers-and-spin-whats-real-story

Here are some headlines you won't see after the
government releases new figures on Social Security and
Medicare later today:

"Social Security Trust Fund Even Larger Than It Was
Last Year"

"Growing Wealth Inequity Will Lead to Social Security
Imbalance Later This Century"

"For-Profit Healthcare Poses Threat to Medicare,
Federal Deficit, and Overall Economy in Coming Decades"

"Public Consensus Grows For Taxing Wealthy to Restore
Long-Term Entitlement Imbalance"

Instead here's what we've already seen:

"Aging workforce strains Social Security, Medicare"

That headline's completely wrong, and yet it's been
repeated in dozens of different news outlets (sometimes
with minor variations) as they run an improved, but
still misleading, news story on Social Security and
Medicare from Stephen Ohlemacher at the Associated
Press.

Perhaps Trudy Lieberman's Columbia Journalism Review
analysis of misleading Social Security reporting had
some impact.

Whatever the reason, it's good to see that Ohlemacher's
article acknowledges the role that our ongoing economic
difficulties have had in slowing revenues for these
programs, and that he quotes critics of the Social
Security-cutting consensus (although with far less
prominence than he does a little-known figure repeating
right-wing talking points.)

Even the Washington Post, which is the nation's worst
journalistic offender on these subjects, shifted the
emphasis with their headline this time. Today they're
running the AP article with the header "Social
Security, Medicare strained by slow economic recovery,
aging workforce."

That headline is 50 percent right - which is a 50
percent improvement.

Ohlemacher's article was occasioned by the latest
report from the Trustees of the fund that handles
Social Security and Medicare, which will be released
today. He writes that "both programs (Social Security
and Medicare) are on a path to become insolvent in the
coming decades, unless Congress acts, according to the
trustees."

Unfortunately the piece provides no context for the use
of the term "insolvent," which most people associate
with bankruptcy or running out of funds. As Sarah Kliff
explains, nobody is suggesting that either of these
programs will ever run out of funds. And when programs
have ongoing sources of income, the temporary absence
of a surplus isn't the same as "insolvency" as that
term is commonly understood.

In fact the report will clearly state that Social
Security's Trust Fund has grown to $2.7 trillion
dollars, and that Social Security will be able to pay
all its benefits in full for a quarter of a century.
After that, if no changes are made, it will be able to
pay 75 percent of scheduled benefits without changes.

Nor is the "aging workforce" the cause for any of
today's concerns, despite the millions of dollars in
advocacy money meant to make us believe that it is.
We've known about the baby boom ever since it ended in
the 1960's, and it was fully addressed in past
adjustments to the program. That's why the program was
considered perfectly solvent for the foreseeable future
after the Greenspan Commission raised the retirement
age and made its other adjustments in the 1980s.

The demographics of that "aging workforce" were well
known to actuaries by then, since all of those now-
aging boomers were already alive and participating in
the workforce. So how could an "aging workforce" have
caused unexpected shortfalls in Social Security?

The answer, which you won't find in the AP article, is
this: As economists like L. Josh Bivens have shown,
there's been a sharp increase in income inequity in the
last couple of decades. The payroll tax which finances
Social Security was reconfigured to capture 90 percent
of the nation's income, but because the richest among
us are capturing more of our nation's wealth that
figures is now closer to 83 percent.

If that hadn't happened there would be no problem with
Social Security at all. Understanding the nature of the
problem helps us come up with a cure. If wealth
inequity is the cause, shouldn't the solution also
center on inequity?

Medicare, unlike Social Security, does have very
serious long-term financial problems. Why? Because
we're the only developed nation that insists in
delivering its health care through a system of for-
profit hospitals and other medical providers. The for-
profit medical/industrial complex has exploded in size
over the last few decades, and it's driving our runaway
health care costs. The for-profit insurance system
which serves most insured Americans under 65 has no
incentive to resist for-profit medical care, and
arguably even benefits from runaway costs.

The impact of for-profit care on Medicare's future can
be inferred from this quote by economist David Blitzer:
""The trends in Medicare are more modest than the cost
increases we have seen in the private commercial
sector." That's because Medicare, as a government
program, is far more cost-efficient than the private
health insurance system. (That difference makes a
mockery of Republican proposals to end Medicare and
replace it with a system of vouchers for private
insurance.)

The AP article prominently features an alarmist quote
from someone named Mary Johnson, who is described as a
policy analyst for the "Senior Citizens League." "I
don't know how to make it clear to the public," says
Ms. Johnson, "but in my mind the sirens are going off."

The Senior Citizens' League does not present Ms.
Johnson's professional qualifications on its website.
And who is the Senior Citizens League? The only member
of the organization with a national reputation is its
apparent founder, former Republican Congressman David
Funderburk. I hadn't heard of it before, but some quick
Googling led to complaints like this one ("Notch
octogenarians should beware of Social Security scam")
and this one ("Got a letter requesting money from them.
The letter is full of propaganda about Mexican
immigrants taking away all social security
benefits??!")

The League also fought against health reform which
claims that it would create a "massive" Federal
database that would make your medical records available
to "millions of people" with "a complete lack of
privacy and confidentiality" and would hit doctors and
hospitals with "stiff penalties." That even earned a
slap from PolitiFact, which has been known to defend
conventionally-accepted misstatements on the subject of
entitlements. According to its website the League's
been on the right side of at least one issue, that of
cost-of-living adjustments, but it's surprising to see
alarmist words from such a little-known group given
such prominence in a piece of this kind.

The AP article also quotes people with more obvious
credentials, including economist Blitzer and Eric
Kingson, a professor of social work at Syracuse
University who co-chairs the Strengthen Social Security
Campaign. (Conflict alert: I'm affiliated with that
organization.) But these more qualified individuals
aren't given the prominent display of the less-well-
known Ms. Johnson.

The simplest, and by far the most popular, solution to
Social Security's future revenue gap is to lift the
payroll tax cap. Such a move would end any future
doubts about its ability to pay benefits, would be
politically popular, and would harmonize with the
wealth inequity that is the source of that future
shortfall.

Yet this solution goes unmentioned until the end of the
article, and then only as the position taken by
"advocates": "Kingson and other advocates say Social
Security could be shored up by simply increasing the
amount of wages subject to Social Security taxes -- an
idea that most Republicans in Congress flatly oppose."

That makes it sound as if this were a matter of
opinion, rather than one of fact, but it's not. Experts
ranging from Ronald Reagan's Chief Actuary to
economists with expertise in this area have confirmed
that this would fully solve Social Security's long-term
shortfall.

By contrast, consider the article's opening sentence:
"An aging population and an economy that has been slow
to rebound are straining the long-term finances of
Social Security and Medicare." That sentence should
have read "Growing wealth inequities and an economy
slow to rebound ..." Near the end another sentence
could have something like "The Senior Citizens League
and other advocates say an aging workforce has
contributed to the problem ..."

That would have been much more accurate. Unfortunately
the AP reverses opinion and fact, presenting one as the
other and vice versa. That will serve to reinforce
widely-held (and, for the right, politically
convenient) misconceptions about the program.
Nevertheless, although it repeats far too many
misconceptions and fails to provide the proper context,
this article is an improvement from past misreporting
on Social Security and Medicare.

We have a long way to go before we can be sure that our
news outle ats are giving people the facts and the
context they need to understand what's happening to
Medicare and a Social Security - and what it means for
them.

(NOTE: The above originally said that the AP article
didn't mention lifting the payroll tax cap at all. It
did, but presented its effects as if they were merely a
matter of opinion. We have rewritten that section of
this piece accordingly.)

===

2012 Social Security Trustees Report Overview

Strengthen Social Security Campaign
April 23, 20012

http://strengthensocialsecurity.org/

Today, the Social Security Trustees released their
annual report on the financial status of Social
Security. The report, issued every year, projects
Social Security's income and outgo for the next 75
years, and once again this year shows that Social
Security has a large and growing surplus.

Unfortunately, some tend to cite parts of the report
selectively, to make the case that Social Security is
in crisis and unaffordable. When the report is read in
its entirety, the facts speak otherwise. Below and
attached are some key points about the Trustees Report,
which we hope will be helpful to you as you review it.

The full Trustees Report can be found at:

http://www.treasury.gov/resource-center/economic-policy/ss-medicare/Documents/TR2012%20OASDI%20Final.pdf

Best,

___________________________________________

Portside aims to provide material of interest to people
on the left that will help them to interpret the world
and to change it.

Submit via email: [log in to unmask]

Submit via the Web: http://portside.org/submittous3

Frequently asked questions: http://portside.org/faq

Sub/Unsub: http://portside.org/subscribe-and-unsubscribe

Search Portside archives: http://portside.org/archive

Contribute to Portside: https://portside.org/donate