Step Back From The Edge - Social Security Is Fine

Among the piles of oversimplifications and outright lies we observed our colleagues in the media foist upon the horse-brained masses Tuesday, one of the biggest false storylines was the whopper about Social Security and Medicare going completely bankrupt.

Whether the supposed date of Social Security and Medicare's demise was 2024, as the National Journal put it, or 2033, like ABC News had it, the fact of the matter is, both of them - and most of the major news sources - let their journalistic integrity fly off a cliff into the dump on this one.

There were a few in the media who got the stories on Social Security and Medicare generally right, including Sarah Kliff at the Washington Post Wonkblog, Travis Waldron at Think Progress, and Jon Walker at the Firedoglake blog.

The best explanation of why Social Security isn't in that much danger, though, was written by someone who isn't just a media colleague of ours. He's also a friend – and the one-time head of Marvel Productions – Rick Ungar.

Currently a freelance columnist, a regular contributor for Forbes, a radio host - and occasionally, when he gets bored, a lawyer - Rick nailed down the description of why the annual report released by the Social Security Trustees isn't the cataclysmic event that so many made it out to be. We highly recommend you read Rick's full column on the subject.

In short, what Ungar and others note is that Social Security - and in a similar way, Medicare - will not be "flat broke" around 2033, as we heard a right-wing blowhard say on the radio. In fact, if the Federal government does nothing, the U.S. Social Security system can continue to pay 100% of benefits to every potential recipient until some point around 2035. At that point, the government program will be able to pay 75% of benefits, for the foreseeable future - long after everyone reading this is dead.

As Rick Ungar specifically notes, when the bi-partisan Greenspan Commission fixed Social Security back in 1983, the intention was to keep funding the program through payroll taxes - also know as FICA taxes - that would include 90% of U.S. wage earners. The Greenspan Commission set a cap of $110,000, and everyone who earns less than that much pays 6.2% into the Social Security trust fund. After someone earns $110,000 in a single tax year, they no longer have to pay FICA taxes on the rest of their earnings.

That formula would have continued to work for America for the foreseeable future, if it weren't for the massive income disparity that's exploded in the U.S. since the early 1980s.

Admittedly, there are other factors that have weakened the health of the Social Security program, including the greater numbers of Baby Boomers retiring all at once, and a continued economic attack on better wages for workers in America. The Bush Recession also made a significant ding in the long-term solvency of the program.

The solution, though, isn't very complex. The original solution was mostly based on percentages - but where it failed was in setting a cap in actual dollars, when the rest of the formula was in percentages. If we fix the formula, and change the FICA cap to a percentage, Social Security will remain stable nearly forever. Sen. Bernie Sanders of Vermont has even had legislation pending - that has been held up by Republicans - that would raise the cap.

So faulty math pushing Social Security - and to a great degree, Medicare - off a cliff, really isn't the problem.

The real problem is that both the U.S. House and Senate would rather fight excitedly over piddling non-problems, like bratty children, hopped up on candy and soda, fighting over who's going to catch a butterfly.

If we didn't know better, we might think our media colleagues who failed on reporting this story accurately were simply practicing to join Congress someday down the road.