They're Trying Cut My Broken Social Security!

"Social Security is going broke!" "They want to cut your Social Security!" Two common statements, both alike in dubiousness

"Social Security is going broke!"

"They want to cut your Social Security!"

Two common statements, both alike in dubiousness. Social Security is not going "broke" by any common definition of broke, and it's woefully unfair to accuse reformers of trying to cut the program when their efforts aim to preserve the entitlement for low- and middle-income elderly.

We heard both fibs last week during a rough on-camera performance from Alan Simpson, the deficit commission's co-chairman. The interviewer accused Simpson of trying to cut the program, and Simpson responded that it was going broke. (Simpson also referred to low-income beneficiaries as "lesser people," which was dumb in a way that has nothing to do with the program's solvency.)

So look: Simpson was exaggerating, for effect. Social Security is not going broke, but it's long term forecast is cloudy. The system has brought in more money than it's paid out for decades, but pretty soon it will run a deficit that will eat through that surplus by the 2030s. After that, the it can only pay for a fraction -- maybe 75% -- of full benefits. That's no big deal for high-income folks withdrawing from lush private savings accounts and stocks. It's a big deal for the bottom 50% of beneficiaries, for whom Social Security checks make up at least 75% of their income.

But surely, Social Security's advocates can see that a 25% shortfall might eventually necessitate ... now you can say it ... cutting Social Security. So Simpson's committee is studying ways to preserve the program, as near to full benefits as possible, further into the century. If we do nothing, older folks will have to swallow a larger benefit cut later, unless we dramatically raise taxes or means test the program immediately. If we act sooner, we can enact more modest changes to preserve the system for the people who need it the most.

The folks who know Social Security know there are basically two ways to reform Social Security: more taxes and/or less spending (although it gets complicated). Liberal think tanks want the solution to involve mostly higher taxes. Moderates are willing to keep higher retirement ages and slower benefit growth on the table. But it's sadly typical that "The system is broke!" and "You're stealing my Social Security!" are the most common descriptions of (a) a temporarily solvent system and (b) a principled attempt to keep it that way.