On 75th Anniversary, Social Security Act's Reform Dominates Discussion

August 16, 2010

The Social Security Act turned 75 on Saturday, and President Obama seized the occasion to remind the public that the United States cannot afford to privatize social security.

"I'll fight with everything I've got to stop those who would gamble your Social Security on Wall Street," President Obama said during his weekly address. "Because you shouldn't be worried that a sudden downturn in the stock market will put all you've worked so hard for - all you've earned - at risk. You should have the peace of mind of knowing that after meeting your responsibilities and paying into the system all your lives, you'll get the benefits you deserve."

Adds the Los Angeles Times in an editorial:

Conservatives have tried for several years to use the trust fund's long-term troubles as a rationale for privatizing Social Security. But allowing workers to take control (and responsibility) for all or part of their accounts would only exacerbate the problem. That's because, despite $2.5 trillion in reserves, the trust fund isn't large enough to finance the benefits promised to workers already in the system. Shifting payroll taxes from the trust fund to private accounts would make the shortfall worse.

The editorial calls instead for a combination of smaller steps, including raising the retirement age, raising payroll taxes, cutting benefits and changing cost-benefit adjustments.

Editorials in both The Washington Post and The New York Times also call for balanced reform, with a combination of benefit cuts and tax increases, but the Post calls the newest numbers a "warning sign," while The Times editorial board says "Social Security is holding up even in the face of a weak economy," due in part to savings Medicare will experience thanks to health care reform.

Paul Krugman writes that claims of a Social Security crisis rely on "bad-faith accounting."

"I'm not just talking about the fact that it's a lot easier to imagine working until you're 70 if you have a comfortable office job than if you're engaged in manual labor," Krugman writes. "America is becoming an increasingly unequal society - and the growing disparities extend to matters of life and death. Life expectancy at age 65 has risen a lot at the top of the income distribution, but much less for lower-income workers. And remember, the retirement age is already scheduled to rise under current law."

Derek Thompson writes in the Atlantic that Krugman's article is misleading, pointing out that modest cuts today will benefit the bottom 50 percent of Social Security recipients more than steep cuts in the future.

The Nation's Katrina vanden Heuvel suggests: "on this 75th anniversary, rather than fighting these Social Security-busters, we should celebrate what has been one of the nation's best anti-poverty programs - a lifeline for millions of Americans - and a reminder of what effective government can do."

She adds:

This anniversary is also a reminder of how major social reforms in this country have come about - in fits and starts. As former Clinton adviser Paul Begala observed in a Washington Post op-ed, "No self-respecting liberal today would support Franklin Roosevelt's original Social Security Act... If that version of Social Security were introduced today, progressives like me would call it cramped, parsimonious, mean-spirited and even racist. Perhaps it was all those things. But it was also a start. And for 74 years we have built on that start."