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Debunking The Conservative Attack On Social Security

by Reason And Democracy Wednesday, Dec. 12, 2001 at 5:52 PM

Conservatives have been attacking Social Security since 1936. They've grown more sophisticated since Republican presidential candidate Alf Landon. called it a "cruel hoax...unjust, unworkable,...and wastefully financed," but they haven't grown more honest. A quick guide to some major lies, written several years ago, with only the links updated.

The Conservative Attack On Social Security

R eason   A nd   D emocracy  
   
   Reason And Democracy Home    
   Fact Guide Menu    

Debunking
  The Conservative Attack  
On Social Security

    Social Security is a "cruel hoax...unjust, unworkable,...and wastefully financed." -- 1936 Republican presidential candidate Alf Landon.

    "Social Security is going to be in pretty good shape until the year 2029, so that is a pretty good fix." -- 1996 Republican presidential candidate Bob Dole, on retiring from the Senate in June, 1996.


Introduction
Social Security Works...Very Efficiently
The Social Security Fund Is Sound
Crises Predictions Are Based On Incredibly Bleak Assumptions
But What About The Baby Boomers Retirement???
Even If The Sky Did Fall, It Would Be Easy To Duck

Cleaning Up A Few Hysterical Details
    Claim: Social Security is a liberal bureaucratic waste.
    Claim: Privatization is *THE* Answer!
    Claim: There's nothing (or nothing but "paper IOUs") in the Social Security trust fund.
    False Promise: The government should cut taxes to encourage more personal savings
    False Promise: Congress and the President should raise the retirement age.
    Claim: Young people have no faith Social Security will be around when they retire.
    Claim: Social Security is a Ponzi scheme that would be illegal if anyone other than the government did it.


INTRODUCTION
    Social Security is a "cruel hoax...unjust, unworkable,...and wastefully financed." -- 1936 Republican presidential candidate Alf Landon.

    "Social Security is going to be in pretty good shape until the year 2029, so that is a pretty good fix." -- 1996 Republican presidential candidate Bob Dole, on retiring from the Senate in June, 1996.


America has always combined strong elements of individualism and communitarianism. For over 60 years, Social Security has been the single broadest, most important expression of our communitarian side-- lifting millions of seniors out of poverty, allowing them a dignified, independent retirement, and freeing their middle-aged children from the direct burden of their support, allowing them in turn to invest in the education of *their* children.

This pattern of shared responsibility--with benefits widely distributed beyond the range of normal discussion of Social Security--has been an integral part of the most prosperous period of American history, enabling tens of millions of working class people to enter the middle class, freed from the crushing burden of directly supporting their parents in old age.

The current attacks on Social Security--styled as "reform," "restructuring," or what-have-you--are politically- and economically- motivated attempts to dismantle a system which, above and beyond all the countless millions of lives it has benefited, stands as a testiment to what Americans can do when they think of themselves as one people--as well as individuals and family memebers.

These attacks seek to take us back to the bottomless insecurity that faced an entire nation during the Great Depression--a period so remote to our last-week-is-ancient-history culture of the selfish now precisely *BECAUSE* Social Security and Keynsian, Big Government spending has prevented anything remotely like it from happening since then.

Stepping back a bit to put things in world-historical perspective, Doug Henwood, editor of the Left Business Observer, reminds us:

    "In pre-industrial societies, where life is short, people tend to work until they can no longer, and then their families take over. With industrialization, despite all the wishes of Newt Gingrich and Phyllis Schlafly, families break apart, and such informal arrangements can no longer be relied on."

Of course, just because a need exists, doesn't mean it will be met. The need must be accompanied by power. Henwood later explains:

    "As the World Bank report puts it, 'In 1889 German chancellor Otto von Bismarck seized a political opportunity to mollify industrial workers and lure them away from the socialists by creating the first national contributory old age insurance system, giving workers a stake in the central government.' It not surprising that when the socialist threat collapsed, the ruling orders felt liberated to launch an attack on pensions."

    --- Doug Henwood, Left Business Observer #67, December 1994. "Is Social Security going bust?"

Thus, the attack on Social Security is very much a product of the end of the Cold War. Without the credible threat of a political alternative, there's just no reason for capitalism to care for the elderly. Whether democracy will prove itself more humane than capitalism remains to be seen... Or to put it another way, whether democracy will prove itself stronger than plutocracy--on this most vital issue-- remains to be seen.

Social Security is a living, breathing example that there's more to life than the narrow, selfish woldview inhabited by conservatives. No wonder they want to destroy it.

Here, then, is an outline of highpoints useful in combatting the massive disinformation campaign being mounted to destroy Social Security.

Back To Menu


SOCIAL SECURITY WORKS...

"Social Security provides retirement income to over 35 million people. It also provides disability insurance to virtually the entire working population, as well as survivor insurance for families in the event of the death of a parent or spouse..."

...VERY EFFICIENTLY

"The system is also efficient: the cost of administering Social Security is less than 0.7% of annual benefits, compared to administrative costs at private insurance companies that are on average more than 40 times as high."

    -- Dean Baker, EPI Issue Brief #112, April 29, 1996, "Privatizing Social Security: The Wall Street Fix" (PDF)

Back To Menu


THE SOCIAL SECURITY FUND IS SOUND

It's sound right now through 2030...

"Social Security is not in danger of bankruptcy. According to the intermediate projection of the Trustees of the Social Security fund (the standard basis for policy projections), the fund will be able to meet all of its benefit payments to the year 2030, with no increase in taxes whatsoever. Even this projection is based on pessimistic assumptions."

    -- Dean Baker, EPI Issue Brief #112, April 29, 1996, "Privatizing Social Security: The Wall Street Fix (PDF)"

And after that...

"Social Security will still be able to pay out 75% of projected benefits, even with no change whatsoever in the tax and benefit structure."

    -- EPI [Reading Between The Lines Dec 7 - 13, 1996]

Based on extremely bleak assumptions....

Back To Menu


CRISES PREDICTIONS ARE BASED ON INCREDIBLY BLEAK ASSUMPTIONS

How pessimistic?

"For example, it assumes that economic growth over the next 35 years will be far lower than during any 35-year period in U.S. history."

"It also assumes that wage growth will not increase, even though the trustees forecast a labor shortage created by the retirement of the baby boom generation."

"History and economic theory suggest that the economy will perform better than indicated by this gloomy scenario, and therefore the Social Security fund should be able to pay out all its benefits even further into the future, with no change in policy."

    -- Dean Baker, EPI Issue Brief #112, April 29, 1996, "Privatizing Social Security: The Wall Street Fix (PDF)"

"The bankruptcy scenario is based on an assumption that GDP will grow at a rate seen only in depression decades."

"As is common in the work of official seers, the trustees present three sets of forecasts, an official guess, an optimistic one, and a pessimistic one."

"The official scenario assumes the economy will grow an average of 1.5% a year over the next 75 years half the rate seen in the last 75 (2.9%), and a rate matched only in one decade of the last century, 1910-20's 1.4% rate. The economy grew more quickly even during the 1930s, 1.9% (1930-40)."

"The growth rate for the trustees' optimistic vision, 2.2%, is only slightly bouncier than the 1930s rate."

"The pessimistic guess is 0.7%, slower than population growth, and a rate so torpid as to guarantee a war of each against all...."

"[T]he system will go bust only if you assume decades of stagnation. If the economy grows in line with the 1973-94 average of 2.4%, still slower than the 75-year average of 2.9%, it will run a big surplus."

    --- Doug Henwood, Left Business Observer #67, December 1994. "Is Social Security going bust?"

Back To Menu


BUT WHAT ABOUT THE BABY BOOMERS RETIREMENT???

Claim: We'll be swamped with seniors. For example "In 1950, we had only 15 seniors for every 100 working-age adults; by 2040, there will be 37." -- Clay Chandler, Washington Post, November 17, 1996.

Truth: It's not the senior-to-worker ratio that matters, but the dependent-to-worker ratio--and that ratio will rise only slightly over the next 3 decades...and never come CLOSE to the ratio's peak during the 1960s.

EPI [Reading Between The Lines, Nov 16 - 22, 1996]: "First, the ratio of seniors to working-age people does not provide a useful gauge of the burden of care placed on working people. A more meaningful indicator is the dependency ratio--the number of people over 65 plus the number of children under 20, divided by the working-age population

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