I like constancy. Knowing that, come spring, the forsythia will bloom is a good thing. But I don’t like knowing that, when Newsweek columnist Robert Samuelson writes something about Social Security, it will be error-filled and disingenuous. Sadly, this too is a constant. A few years back, Samuelson inspired me to invent the Samuelson Unit, which, like the Friedman unit, is a period of time, X units in the future, at which point something will happen. Like Zeno’s Paradox, we never seem to reach that point, which, even given the past couple of years, is still 27 years away*.
Well, Samuelson’s at it again, this time calling Social Security “middle-class welfare.” (Since both the poor and the rich get welfare of various sorts, I say, why not the middle class too? But I digress). But Samuelson’s whole argument is predicated on the assumption that Social Security won’t be able to fulfill its obligations. Well, we’ve dealt with that silliness before:
The CBO forecasts that if RGDP [Real Gross Domestic Product] grows annually at approximately 2.5 percent, then in 2037 Social Security tax revenue alone will be able to pay 78 percent of promised benefits without any changes to the program. In terms of the goods and services that these 78 percent of benefits can buy, i.e., in what economists call “real” terms, benefits will be greater than 100 percent of those paid in 2011!
RGDP grew at an average annual rate of 3.4 percent over the last 80 years, including the Great Depression of the last century. If annual RGDP grows anywhere near this historic average for the next 27 years, then in 2037 and for long after, Social Security will pay 100 percent of promised benefits, again with no changes whatsoever to the program!
So, if the economy grows for 27 straight years at three quarters of the [historical] average rate of growth, we have to make minor adjustments in the program (either in the future or starting now [depending on what we want to do]). Do we really think that’s going to happen? As pessimistic as I am, I really don’t. And even if it does, Social Security will be an easy fix.
And Dean Baker demolished Samuelson’s argument over a decade ago–when Samuelson was saying the same damn thing, even as we were running budget surpluses.
We have a lot of crises, both immediate and long-term. The ability to pay Social Security benefits is not one of those crises, unless you want to argue that the economy will go into a decades long, ahistorically dreadful tailspin. Even then, we can fix the Social Security shortfall with small tax increases.
Can we impeach columnists?
*For example, in 1993, the ‘middle’ estimate predicted that Social Security would become bankrupt in 2023. Now, the Date of Doom is 2038. Or not.