On August 4th of this year, Personal Investment Reporter — Russell Wiles of the Arizona Republic filed a page one story about the viability of Social Security. Wiles spoke concerning “long-term financial dangers”, and referenced a recent report by the Social Security and Medicare Board of Trustees (SSMBT). So far so good, that is what we call news.
While Mr. Wiles is entitled to his opinions, articles on the front page of the largest daily circulation newspaper in Arizona deserve to remain factual reports, not editorial pieces. Mr. Wiles correctly identifies the volatility of the Social Security debate, then proceeds to obfuscate the facts concerning the solvency of the Social Security fund. So I emailed him my disappointment with his writing, as follows.
August 4, 2008
Mr. Wiles, you wrote on page one of the Arizona Republic — Monday, August 4, 2008:
“The system faces long-term financial dangers, with the most recent Social Security trustees’ report predicting expenditures will start to outpace tax revenues by 2017, with the fund mostly exhausted by 2041.” (emphasis mine)
No, the fund will not be exhausted by 2041 according to the Social Security Board of Trustees. The Board predicts the fund reserve will be mostly exhausted by 2041 if nothing is done before then to correct the shortfall. The fund itself will be fully solvent in 2041.
And furthermore, one can find in print:
Social Security is a “program that the Congressional Budget Office (CBO) projects to be fully solvent until 2046 with no changes whatsoever. CBO projects that even after the date when the program can no longer pay full benefits it would always be able to pay larger real benefits than what current retirees receive”.
As a personal finance reporter, you must certainly understand the difference between what the Social Security Board of Trustees wrote and what you reported. I accuse you of mis-speaking at best and fear-mongering if your meaning was intentional.
Sincerely,
Jeff Stana
Assessments vary, but the difference in the projections of the SSMBT and the CBO may well reflect adjustments for the latest inflationary pressures acknowledged in the newer SSMBT estimate. Social Security payments are scaled to cost of living measurements. Higher inflation (which we have been experiencing for the last few years — accelerating of late) adversely affects reserves, perhaps accounting for the five year difference in marking the exhaustion of reserve funds.
Using the latest SSMBT figures, Social Security remains fully solvent until 2041, even if nothing is done to address this future deficit. These are the facts. After 2041, Social Security beneficiaries will receive reduced payments, unless additional revenues are generated. It is not the case that all funds will be exhausted, as might be deduced from the writings of Mr. Wiles. That is why; he was rightly accused of fear-mongering.
The merit for and against the existence of Social Security is a different argument, waged for political and philosophical reasons. Those who would wish the demise of Social Security, for whatever reason, tend to exaggerate future deficits with the administration of the Social Security program. Convoluting the viability of the Social Security Administration with the Medicare/Medicaid program is another common tactic taken by the detractors of Social Security. At present, various solutions to the more calamitous trouble with spiraling costs for health care and medical insurance are under consideration and are being seriously debated in Congress.
Mr. Wiles kindly responded to my personal email the very next day. He employed the above mentioned second stratagem, pooling the financial troubles of Social Security with Medicare. This is dishonest and hints at ulterior motives beyond a dispassionate financial assessment. Again, political opinion is best suited for the editorial pages. It is not front page news. In his emailed response to my criticism, Mr. Wiles wrote:
OASDI tax income will begin to fall short of outlays in 2017, and will be sufficient to finance only 78 percent of scheduled annual benefits in 2041, after the combined OASDI Trust Fund is projected to be exhausted. (emphasis mine)
The combined OASDI Trust Fund about which Mr. Wiles speaks, is the combination of the Social Security Administration and Health Insurance Trust Funds of the Medicare/Medicaid program. Though both programs are designed to offer protection for Americans without continuing wage income, individually each fund is not equally at risk of default. Lumping trust fund issues together and predicting grave consequences, does much to raise national anxiety. It does little to advance thoughtful ideas or promote solutions with which we can mostly agree.
It is admirable to advertise a need for financial correction, when pursued without melodrama — to advocate for adjustments to shortfalls in revenue and/or the regulation of outlays in expenditures at Social Security. Cool analysis will not be remembered with the fervor of dire warnings of eminent disaster. Yet deliberate, serious calculation is required to find honest answers that promote the general welfare of our nation.
Tags: cultural anxiety, insurance industry, neoconservative, wing-nut conspiracy