Social Security Trustees Report Out … CRFB Lies About It

by Dale Coberly (Dale has been posting on AB on Social Security for over 12 years…some of his work and Bruce Webb’s can be found under our new category Social Security)

Social Security Trustees Report Out
CRFB Lies About It

When is a not-a-lie really a lie?

When the liar gives you a part of “true information” and leaves out “the whole truth” in order to lead you to a false conclusion.  Or worse, to lead you to do something that hurts you.

Today Maya MacGuineas, president of the Committee for a Responsible Federal Budget, issued a statement in which she said:
“Acting today, we could fix Social Security with a 27 percent tax increase or 21 percent benefit reduction.”

What makes this a lie, though technically “true,” is that MacGuineas knows that the “27% tax increase” is 27% of a 6.2% tax…or about a 2% of payroll increase.  On the other hand, the 21% benefit reduction is indeed 21% of the whole benefit. An average benefit is about 1500 dollars…so the benefit cut would amount to 300 dollars, leaving the retiree with about 1200 dollars a month to live on.

But the 2% of payroll tax increase, that would eliminate this benefit cut, would be 2% of about a 1000 dollar per week paycheck.. or about $20 dollars per week.  And CRFB knows that this $20 per week increase in the tax does not have to happen all at once, but can be phased in about a dollar per week per year at a time, while wages are expected to grow by over 200 dollars per week (at 10 dollars per week per year).

MacGuineas also says, “Not only is this year’s outlook worse than in last year’s report,..”  but it’s not.  Not materially. The long-predicted shortfall in Social Security finances is the same as it has been since 2007 or earlier. SS will require a 4% increase in the tax in about 2030 or so, which can be reached by phasing it in at one-tenth of one percent at a time (if we start now). That 4% is the combined tax for both the employer and the worker.  I used the one-tenth of one percent per year..which is the worker’s share and will be matched by a one-tenth of one percent per year increase in the tax paid by the employer.  Sorry for the confusion, but I believe that the share paid by the worker is what matters to him, while the combined worker plus employer tax is what most people, not workers talk about. 

I have recently been accused of lying about this to make the required increase look smaller than it is….even when i make a point of explaining the difference between what the employee pays and what the combined tax is.  There is no lie here…whether it’s one dollar a week or two,  it makes no meaningful difference to the worker.

Finally, here is the way real professional liars lie:

(MacGuineas says):
“”Thoughtful reforms can protect and strengthen benefits for those who rely on them, enhance progressivity, lower health care costs, improve our fiscal outlook, and support faster economic growth. Both tax and spending changes should be on the table…”
“With the economy on course for recovery, it’s time we turn our attention to rescuing Medicare and Social Security so these programs remain financially sustainable for current and future generations.”

This sounds so reasonable and good I might have written it myself.  But MacGuineas and CRFB have absolutely no interest in making these programs financially sustainable for current and future generations. “Spending changes” means benefit cuts.  And “making these programs sustainable” means keeping the program’s name for a program that cuts benefits below a level where “the program” is no longer meaningful as retirement insurance:  Cutting government to a size where it can be drowned in the bathtub.