News Release

Social Security: Behind the Spin


Price is research director at the Economic Policy Institute. He said today: “Four years ago, President Bush assured us that we could afford his massive tax cuts tilted toward the well-to-do and still maintain a budget surplus large enough to maintain Social Security commitments. Now, four years later, we have deficits largely caused by tax cuts that have cut revenue more than 2 percent of GDP indefinitely. Wanting everyone to forget his commitments of four years ago and the fact that private accounts would require ‘massive new borrowing’ immediately, the President bemoans the projection that it would take borrowing from the general fund to maintain Social Security benefits beyond 2042. The Congressional Budget Office projects that the Social Security system’s 75-year shortfall is only 0.4 percent of GDP — one fifth of the size of the President’s tax cuts.”
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Weisbrot is the co-director of the Center for Economic and Policy Research and co-author, with Dean Baker, of Social Security: The Phony Crisis (University of Chicago Press). He said today: “In his State of the Union speech, President Bush declared: ‘Thirteen years from now, in 2018, Social Security will be paying out more than it takes in.’ … What President Bush is saying is that in 2018, Social Security will have to pay out more in benefits than it receives in payroll taxes. About $16 billion more, according to his (Social Security Trustees) estimates. What he did not say is that the Social Security Trust Fund in 2018 will have more than $3.6 trillion in assets, as well as $206 billion in interest income that year. (All numbers are expressed in today’s dollars.) So even if Social Security cruises along on auto-pilot for the next 13 years, 2018 will arrive and depart quietly and without notice. In 2018 a small fraction of Social Security’s interest income will be used to pay benefits.”
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Zuckerman is president of the National Research Center for Women & Families. She wrote the article “Social Security and Women.” She said today: “President Bush’s promise that he will ‘not touch Social Security’ for anyone over 55 seems like a strategic move to divide and conquer, since the people most concerned about Social Security and most enamored of the current program are those who are retired or soon will be. They also happen to be most likely to vote. Younger voters are more interested in personal private accounts because they have been repeatedly (and falsely) warned that Social Security won’t be there for them. … Personal private accounts would require cutting guaranteed benefits, which would hurt millions of Americans, especially women — since women are less likely to have private pensions.”
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Chasanov is the deputy director of policy at the Economic Policy Institute. She said today: “Younger workers will bear the brunt of the transition costs of privatization — they will be the ones to pay back this new national debt either in the form of future tax hikes or reduced government services. Second, according to the Congressional Budget Office, younger workers will face deeper benefit cuts if the President’s privatization plan is adopted. The replacement rate for the average earner decreases over time under privatization: it’s 27 percent for workers born in the 1980s and 22 percent for workers born in the 2000s.”
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Spriggs wrote the recent article “Another Mistaken Racial Stereotype: Contrary to the right’s claims, Social Security is a good deal for blacks.” He is a senior fellow at the Economic Policy Institute. He said today: “The President says that he will protect those 55 and over from any cuts in benefits. … Note the … beneficiaries he is leaving out, those who are disabled, or who are survivors. The almost 3 million children who receive Social Security, for instance, are under age 55. Adult disabled children who currently receive Social Security benefits are not included in this pledge.”
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For more information, contact at the Institute for Public Accuracy:
Sam Husseini, (202) 347-0020; or David Zupan, (541) 484-9167