News Release

Social Security: “Shortfall” Warnings Distort Reality, Critics Charge


WASHINGTON — Hours after an influential think tank released a report Monday warning of a multi-trillion-dollar “shortfall” for Social Security, several economists and policy analysts denounced the report as a misleading effort to promote privatization of the federal program.

The report, issued by the Heritage Foundation, claims that Social Security “is a very bad deal for younger workers” and that “the Social Security system is bankrupt.” But specialists associated with the Institute for Public Accuracy, a national consortium of policy researchers, blasted the report as a “misleading analysis” based on “inaccuracies” and “half-truths.”

Among those available for comment are:

Co-director of the Institute for America’s Future and director of the Institute’s Social Security Information Project, Hickey commented that the Heritage report “is typical of the kind of misleading analysis that opponents of Social Security have been getting away with for the past two years. But they’re not going to get away with it anymore. They are playing with numbers and they are misleading the American public, downplaying the risk that privatization would wipe out people’s retirement savings. And I’m talking about the baby boomers and younger workers who would be affected, not today’s retirees.”

Rasell, an economist with the Economic Policy Institute, said: “The Heritage report is inaccurate and misleading. The Social Security system is fully sound for the next 34 years, until 2032; then revenue from payroll taxes (at their current level) will enable the system to pay 65-75 percent of benefits indefinitely into the future. Minor changes in the program would ensure full benefit payments for the next 75 years. Social Security is much more than a retirement savings plan. It also provides income support for disabled workers and their families and survivors of deceased workers who jointly make up about one-third of all beneficiaries. Standard private investment accounts do not provide these benefits. Social Security is crucially important to most retirees, providing about three-quarters of the typical senior’s income. The program can and must be preserved as a reliable and risk-free source of retirement income.”

Riemer, director of the 2030 Center, which works to ensure that Social Security will still be around for Gen Xers, said: “Why single out Social Security for its ‘unfunded liability’? The long-term unfunded liability of the Pentagon is many trillions of dollars. Nothing Heritage is proposing would really reduce the economic costs associated with aging. More importantly, the Heritage approach to handling the economy will push working families’ incomes right into the ground. Income growth is the only thing that will really help.”

Weller, a staff economist with the Center for Popular Economics, said the Heritage report “is littered with inaccuracies, half-truths and outright omissions, and certainly does not add anything to the debate.” Weller continued: “Once a cash deficit occurs, Social Security will have plenty of interest income to more than cover its obligations, and fund holdings will subsequently continue to grow. However, while Heritage views bond interest income earned by Wall Street as income, it discounts the same interest income earned by Social Security trust funds as ‘meaningless.’ Social Security has always been a good deal and the bedrock of economic security in retirement, and it remains so.”

Zuckerman, director of research for the Institute for Women’s Policy Research, said: “Proposals to privatize Social Security ignore the ways that the current system protects many Americans from poverty, including widows and women who spend many of their adult years caring for their children as homemakers or part-time employees. Changes to the Social Security system are essential, but these changes can’t ignore the fact that women tend to earn substantially less than men. The report is based on a false premise. The Social Security trust fund is not bankrupt, and the system can be strengthened without the kind of radical changes that would have tragic repercussions for many women.”

For more information, contact Theresa Caldwell or Sam Husseini at the Institute for Public Accuracy, (202) 347-0020.