CNN's Social Security crisis
The August 5 reports from the Social Security and Medicare trustees declared Social Security’s long-term financial outlook mostly unchanged from the previous year, and the projections for Medicare were greatly improved from previous forecasts. But on CNN‘s Situation Room, this news amounted to a crisis in Social Security and a threat to the country.
On the August 5 broadcast, host Wolf Blitzer announced: “Social Security reaches the final financial tipping point. The system is now paying out more than it’s taking in. Will Washington do anything anytime soon to fix this problem?” Blitzer was referring to the fact that this year Social Security is paying out more in benefits than it receives in tax revenue–a mostly meaningless fact, given the system’s $2.5 trillion long-term surplus (CEPR’s Social Security Byte, 8/5/10). But Blitzer turned to a single guest, Beltway fixture and former presidential adviser David Gergen, to echo his alarmism.
“We’re getting disturbing numbers now once again on Social Security,” Blitzer declared. “We seem to be getting these every few years, and people sort of just kick this can down the road.” Gergen responded that government debt will “seriously threaten the future of the country.” He acknowledged that the trustees’ reports suggest the programs are “in good shape,” but as a self-described “deficit hawk,” he still saw a crisis looming, since “the government is going to have to put more and more money into it…and therefore, the cost to government will go way up and the size of the national debt is going to continue to go up.”
When Gergen says that the government is going to “put more and more money” into Social Security, he means that the government is going to start paying back some of the trillions of dollars it has borrowed from the Social Security system. He and Blitzer see this as a crisis; others would see it rather as the deserved and anticipated return of enormous amounts of wealth to the working people who contributed to the surplus over the last three decades, specifically so that it could be paid back now as the baby boomers begin to retire.
Gergen’s conflation of Social Security and Medicare can only mislead viewers. Social Security over the long term is expected to consume a constant share of U.S. GDP, about 6 percent–roughly 1 percentage point more than it does now. This increase can be paid for with minor adjustments to the program, such as raising or eliminating the cap on income subject to Social Security taxes (currently $106,800). These changes can be made decades from now, when the trust fund is finally depleted. Medicare, by contrast, really is growing unsustainably–because medical costs in general are growing unsustainably, and need to be brought under control to avoid general economic collapse. To treat the two programs as being similar problems completely obscures the very different solutions each requires.
The August 5 segment does not seem to be an outlier for the Situation Room. An August 9 report from Lisa Sylvester, for instance, suggested two possible approaches to Social Security: raising the retirement age or increasing the tax rate, which “could hurt small businesses and low-wage workers.” As Sylvester put it, “There are just no easy answers.” But one option that would be much easier–raising the cap on income subject to the tax, which would not affect low-wage workers–went unmentioned.
And on July 16, CNN commentator Jack Cafferty mentioned that politician have “run out of options on how to pay for Social Security, which is broke.” That statement is completely false, unless a program with trillions of dollars in assets, sufficient to fund its obligations for decades to come, is “broke.”
On the August 5 show, Gergen pointed out that this year will bring plenty of opportunities to talk about Social Security: “We at CNN and others can really help people understand what the choices are facing the country because they are tough choices, very hard choices, and a lot of Americans are going to be startled by just how serious some of this is.”
If CNN‘s Situation Room program is serious about covering Social Security fairly, they need to balance the views of Cafferty and Gergen with experts like economist Dean Baker of the Center for Economic & Policy Research, or Nancy Altman from Social Security Works, who can give viewers an informed, clearer-eyed assessment of Social Security’s finances.
Ask CNN‘s Situation Room to bring on Social Security experts who would challenge the alarmist views featured recently on the show. Social Security is an important subject that deserves balanced reporting.
CNN‘s The Situation Room
CORRECTED VERSION: A previous version of this alert understated the Social Salary cap. Corrected August 12, 2010.