Why Does Social Security Confuse Reporters So Much?

Dean Baker, Paul Krugman, and Merrill Goozner explain the ways in which The Washington Post's big Sunday story about Social Security is overly alarmist and perpetuates widespread misperceptions. Even though the recession has caused Social Security's payroll taxes to fall short of payments owed to current beneficiaries a few years earlier than expected, which the Post misleadingly casts as a "treacherous milestone," the interest on the program's still rapidly growing trust fund is more than sufficient to cover that gap. According to Social Security's trustees, the program will still be able to continue paying out benefits in full until 2036, when the trust fund would be exhausted and benefits would have to be reduced by about 25 percent.

Reasonable people can differ about whether reforms to prevent that eventuality should be undertaken sooner rather than later. Particularly in a political environment when Republicans are refusing to contemplate any tax increases, which would require all changes to take the form of benefit cuts, it is by no means irresponsible to support delay until a more balanced approach is feasible in Congress. Moreover, Social Security's fiscal condition is far less urgent than severe  economic problems in the here and now, like persistently high unemployment. Still, the entire tone and thrust of the article was that Congress has been negligent in failing to take action, and that politicians and advocates who downplay the urgency of Social Security's fiscal challenges are opposing the public interest.  

Why are media stories about Social Security almost always built on the erroneous premise that the program is on the verge of a dire crisis?  Among the myriad reasons:

• There's no story unless a sense of alarm can be created. In this case, it would be difficult for the writer to sell her editors on a big splashy piece about how the decline in payroll taxes below current benefit levels is a long anticipated transition that poses no immediate threat either to Social Security or the overall federal budget. 
• Since almost all other media stories about Social Security sound alarmist, reporters sifting through the web equivalent of clip files must feel reluctant to go out on a limb and write something different.
• Math. Most reporters don't feel comfortable enough with big numbers to evaluate on their own which of their sources are right and which are purveying misleading information. In that context, fear-mongerers win out because their stories are more dramatic.
• A distrust of advocacy groups that represent particular segments of the public. Reporters often discount the arguments of the AARP and other membership organizations that strongly support  Social Security because those groups are perceived to be self-interested. In contrast, organizations funded by billionaire Peter G. Peterson are perceived to be less biased because they don't represent public constituencies—even though Peterson has sponsored a long-standing and well known  campaign to cut Social Security benefits.
• The default perspective in Washington is that the "responsible" point of view is that federal budget deficits are inherently dangerous and Social Security contributes to that danger. Both elements of that conventional wisdom are wrong, but understanding why requires the listener to have the rare traits of patience and an open mind.    
• Stories about Social Security, like the Post's, inevitably become entangled with challenges posed by the health care system as the population ages. But the problems confronting America's medical system are far more severe and complex than the modest long-term shortfall facing Social Security. Conflating the two very different sets of issues, which advocates of Social Security cuts consciously do to win over their audience, confuses reporters and misleads the public.

No matter how much effort is exerted to try to educate reporters about Social Security, overly alarmist stories like those in Sunday's Post seem destined to outlive us all even as the program itself continues to survive.   

Comments

[Ken Newhouse]

The problem is that the trust fund is invested in the sponsor of the plan. It is about as secure as a failing employer whose pension plan is invested entirely in it's own stock. And if you don't believe the US is a failing company, take a look at it's income statement. A private company whose expenditures exceed it's revenue by 80% would not be in business long. The actuarial projections show that Social Security and Medicare alone will be payuing benefits equal to 18% of GDP by 2050 (see ASPPA). 18% of GDP is the long term average of tax revenues in this country. So by 2050 all tax revenue will be used for just those two expenditures unless something is done now, or unless tax revenues increase to about 40% of GDP. That smells like crisis to me. Small adjustments now can avoid painful cuts in the future.

[Pensiongeek]

Even worse are the reporters who insist on sticking their heads in the sand by claiming the trust fund will keep Social Security afloat. Congress already spent all of the excess funds received by the SS system. The trust fund consists entirely of government promises to pay. Our government already spends more than $3 for each $2 of tax revenue. Where do you think they are going to get the money to repay SS? They will have to borrow still more, which is the problem being discussed in the articles you deride.

If Social Security had been run like a pension plan with a trust fund consisting of independent assets, we would not be having this discussion.