Column: An exhaustive debunking of the dumbest myths about Social Security

Myths and canards about Social Security and its supposed fiscal troubles have steadily proliferated over the years. But it’s rare to find them all concentrated in one place as they were in a recent article on the online news site Slate.

Slate paired Eric Boehm, a writer for the conservative magazine Reason, with a writer named Celeste Headlee for a dialogue titled “Social Security Doesn’t Make Sense Anymore.” The roughly 2,000-word piece contained so many misconceptions, inaccuracies, misrepresentations, and flat-out lies about the program that I almost gave up counting. That said, it’s perhaps worthwhile to have a one-stop shop for all these sophistries, if only for the purpose of debunking them en masse.

The article called for a “radical rethink” of Social Security to make it somehow more relevant to Americans in the modern world. Boehm and Headlee evidently think that’s a world in which America is on the brink of insolvency and can’t afford to spend another dime on the disadvantaged, that Social Security recipients are rich, and that older Americans can have their pick of jobs that will keep them happy and healthy indefinitely.

Slate says their dialogue was “edited for clarity,” but the only thing it made clear is that neither of them knows the first thing about Social Security. More alarming, they showed no inclination to learn.

There isn’t space here or time for me to list every solecism in the piece, so I will focus on some of the most egregious errors.

—“People who are young and working ... are funding the retirement of generally wealthier Americans.” This notion was popularized by former Sen. Alan Simpson (R-Wyo.), who went around calling Social Security beneficiaries “greedy geezers” and disdained the program as “a milk cow with 310 million tits.”

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The underlying idea is that the average Social Security beneficiaries are doing better than the poor souls in the working class who are paying for their lives of leisure through their payroll taxes. It’s commonly reported that retirees are, on average, the wealthiest cohort of Americans.

Here’s what’s wrong with that idea: The reason that so many seniors are able to live comfortably is because they receive Social Security.

As Kathleen Romig of the Center on Budget and Policy Priorities has reported, “most people 65 and older receive the majority of their income from Social Security.” The poverty rate among Americans older than 65 is 10.3%. Without Social Security, it would be nearly 38%. To put it another way, Social Security keeps more than 15 million seniors out of poverty.

The average Social Security monthly check is $1,709.70, which works out to $20,516 a year. That’s about $800 more than the federal poverty line for a family of two.

The idea that cutting off the wealthiest seniors or at least reducing their benefits would help save Social Security is a popular myth, with recipients like Warren Buffett and Bill Gates the most common illustrative targets. The goal is to promote “means-testing” the program.

But myth it is. As of 2017, about 47,500 millionaires were receiving Social Security. Their total benefits came to about $1.4 billion, or about 15 hundredths of a percent of the $941 billion in benefits the system paid out that year. If you’re intent on “saving” Social Security by means-testing, you would need to start cutting off or reducing benefits for recipients earning about $70,000 a year in non-Social Security income — not millionaires.

Boehm backed up his thoughts on this topic with some suspect data. He cites the Federal Reserve in asserting that “the average value of a retired person’s assets” today is $538,000. Hmm. My reading of the Fed’s latest digest from its Survey of Consumer Finances, issued just last month, places the median net worth of those aged 65-74 at about $410,000; for those 75 and older, it’s $335,600.

Does that make them rich? Using the common rule of thumb that one can spend 4% a year of retirement savings to have the best chance of not outliving your nest egg, $410,000 produces $16,400 a year. Not the basis of a lavish lifestyle. Even a nest egg of $538,000 doesn’t make for a life of leisure — in one’s first year of retirement the 4% rule would yield $21,520.

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—Just raise the retirement age? Boehm: “When Social Security began, you could get benefits at age 65, but the average life expectancy in this country was like 61. So the average person actually died before they qualified for Social Security.” This is another quacking canard from the Simpson duck pond.

Average life expectancy from birth in 1940, when the first Social Security checks went out, was about 63 and a half, which I suppose is “like” 61. But that figure was skewed lower by high infant mortality; Boehm acknowledges this, but doesn’t bother to explore its ramifications, perhaps because it explodes his take.

For Americans who made it to their first birthday back then, average life expectancy was nearly 66. For those entering their working careers, say at age 20—the relevant cohort for assessing the chances of collecting Social Security — it was nearly 69.

In other words, the average person did not actually die before qualifying for Social Security; the average person collected for years. Indeed, those who were 65 in the late 1930s lived on average nearly to 78.

Anyway, life expectancy is closely connected to race, educational attainment and income. Those who live longest are whites, college graduates and the affluent. Raising the retirement age is a curse on those who don’t fall into those categories. White people aged 65 have gained more than six years of longevity since the 1930s; Black males only about four years.

By the way, what are workers supposed to do while they’re waiting longer to reach retirement age? Leaving aside the impact of age discrimination that makes it harder for older people to obtain or keep jobs, the Census Bureau has reported that more than half of all workers aged 58 or older were in physically demanding jobs or jobs with difficult working conditions — more than 13 million workers.

As economists Cherrie Bucknor and Dean Baker pointed out in a 2016 paper, “the workers who were most likely to be in these jobs were Latinos, the least educated (less than a high school diploma), immigrants, and the lowest wage earners.”

I don’t know what Boehm’s working conditions are like, but I’d bet they don’t “require dynamic, explosive, static, or trunk strength, bending or twisting of the body, stamina, maintaining balance, or kneeling or crouching” or involve “exposure to abnormal temperatures, contaminants, hazardous equipment, whole body vibration, or distracting or uncomfortable noise.” It’s easy to think that everyone else should work harder, if your frame of reference is your own office desk.

—Social Security is “a welfare program”: Boehm pushed this idea hard. “You would never build a welfare program, you would never get Congress to approve the construction of a new welfare program, that took money directly from the paychecks of workers and transferred it to a wealthy cohort somewhere in this country,” he says.

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There’s a manifest danger in calling Social Security a welfare program. That’s because welfare programs are easiest to axe when conservatives go hunting for budget cuts — Americans typically view them as serving layabouts and malingerers at their expense.

Social Security is nothing like a welfare program, however. It’s a contributory system, funded entirely by its beneficiaries through the payroll tax. Its benefits are tied to lifetime contributions. That’s why billionaires get it, too — they contributed to it during their working lives. Nor is it only an old-age pension: It encompasses disability benefits and insurance to cover spouses and children when their breadwinner suffers an untimely death.

Before Republicans started casting “entitlements” as a dirty word, Americans saw their entitlement to Social Security benefits as a blessing — most still do. They’re entitled to it because they’ve paid for it with every paycheck.

The idea that the system represents a war between seniors and younger generations is just wrong. Whatever fiscal problems face Social Security, it’s because it’s exploited by the wealthy at the expense of everyone else.

In 1937, when the payroll tax was first collected, it applied to about 92% of all earned income. By 2020, that figure had fallen to 83%, largely because of an increase in income inequality. Were the payroll tax to be restructured to cover 90% of earnings, as the Congressional Budget Office reported last year, that would produce an additional $670 billion in revenue over 10 years; raise it to cover all annual earnings over $250,000, the gain would be $1.2 trillion — all without cutting benefits by even a penny.

—Social Security “is going to hit a brick wall in the 2030s.” This is Boehm’s gloss on the familiar projection that the program’s trust fund will run out some time in the middle of that decade. Is that a “brick wall”? Hardly: At that point, the program will still be guaranteed enough revenues to continue paying three-quarters of all scheduled benefits.

That’s a middle-of-the-road estimate. The system’s actuaries have also projected that given alternative demographic and economic assumptions — including assuming the unemployment rate and economy stay where they are today and immigration rises closer to its historical norm, the program might even be able to pay all benefits indefinitely.

—”The cost of Social Security is ... ballooning quite rapidly”: This holds no water at all. The CBO projects that Social Security benefits as a share of gross domestic product, currently 5.1%, will rise to 6.2% by 2053. If that’s a balloon, it’s inflating pretty slowly.

In that time span, incidentally, GDP will more than triple to $79.5 trillion from $26.2 trillion, according to the CBO.

Boehm’s argument is that Social Security is becoming such a fiscal burden that it’s “killing the safety net.” He says, “There’s not enough money to go around,” which is absurd to say about the richest nation in world history. He says the cost of Social Security and Medicare, which he seems to think, erroneously, are related programs, is “pushing other things to the budget into a territory where we have to borrow more money to pay for them.”

That’s obviously not so. We wouldn’t have to borrow if we took such reasonable steps as repealing the 2017 tax cuts for corporations and the rich that drove a hole into the federal budget, or started charging the wealthy for their fair share of Social Security. He mentions that Americans have experienced “decades of greater prosperity,” but not that the benefits of that prosperity have been collected overwhelmingly by the 1%.

Boehm and Headlee plainly intended to tell it like it is on Social Security. Unfortunately, their effort was hampered by lack of information. Would it have killed them to do even a little research?