It’s time for a fact check, Dana Bash, CNN, and Republican presidential candidates. Repeat after me: Social Security is not in danger of running out of money, leaving people, to paraphrase Chris Christie slightly from Wednesday’s Republican debate, to choose “between heat and rent and food.”
The issue came up when Bash asked how “to get Social Security solvent again,” repeating one of the bigger canards out there. So what was Christie talking about when he said, in response, that “Harvard and Dartmouth say Social Security will go insolvent in seven to eight years”?
Christie was referring to the work of Gary King, a professor of political science at Harvard University; Samir Soneji, a professor at Dartmouth College’s Medical School; and Konstantin Kashin, a Ph.D. candidate at Harvard University, who claim the Social Security Administration is widely overestimating the financial health of the program.
According to the most recent estimates by the Social Security Administration, the trust fund that pays benefits for such things as retirement and disability will run out of money in 2033. But the work by King, Soneji, and Kashin argues the date might be sooner. Why? They make a case that the Social Security Administration’s formula for determining the health of its funds is flawed, relying on less than up-to-date statistical analysis, not to mention more than a bit of misinformation.
For example, as elaborated in a piece in Barron’s about their work, they say that since 2000, actuaries for the fund claim women will not live as long after reaching the age of 65 as they actually have. Yet they say that instead of fixing the formula, the actuaries continue to calculate the how much money they expect to pay out based on outdated data. As a result, the fund is getting drained at a faster rate than the Social Security Administration is projecting.
Case closed? Not exactly. First, the Social Security Administration claims King et al. made their own mistakes in calculating their figures. Moreover, quite a few equally-as-authoritative outside sources don’t agree with the analysis from the Harvard and Dartmouth researchers. Dean Baker at the Center for Economic and Policy Research points out, for example, that living longer might well imply better health, impacting everything from disability payouts to health care cost increases.
Think of it this way: Forecasting is an art and not a science, and involves guessing at everything from inflation rates to salary increases, and then guessing how they will all impact one another.
In addition, whatever happens to the trust fund, it’s not like Social Security ceases paying out even if it runs out of money. Most estimates claim that the system will be able to pay about 75 percent of promised benefits for the next several decades—unless, like Christie advocates, Social Security benefits get cut. Then it might pay even less.
And it’s not like this is inevitable and nothing can be done to stop it. Estimates are that somewhere between 70 to 80 percent of the projected Social Security deficit could be eliminated by eliminating the Social Security payroll tax cap, which is the amount at which the federal government stops taxing earnings to support the program. This year, it’s $118,500.
And when the New York Times ran an op-ed from King and Soneji in 2013, it also got the two men to calculate the tax increase that would be needed to cover their projected deficit of $801 billion in 2031. The back-breaking load we the people would need to take on? An additional $60 a year in 2022—that’s seven years from now, by the way. That number is then expected to double to the princely sum $120 annually a decade later.
I think we can afford that.