The case for expanding Social Security: A conversation with Nancy Altman and Eric Kingson

Nancy Altman

Nancy Altman

Nancy Altman and Eric Kingson are two of the nation’s leading progressive advocates for strengthening and expanding Social Security. Their new book, Social Security Works: Why Social Security Isn’t Going Broke and How Expanding It Will Help us All, lays out the case for expanding benefits in order to address growing income inequality and the looming retirement crisis. I recently interviewed Altman and Kingson about the book and their proposal, called the All Generations Plan for Social Security.

This book fills an important gap in that it corrals all the important issues and progressive arguments now rattling around on Social Security policy – and the authors explain it with a cogent, easy-to-understand writing style. I recommend it to anyone interested in gaining a better understanding of Social Security policy and how the program can play a larger role in resolving our retirement security problems.

I talked with Altman and Kingson about the broad disconnect in Washington’s understanding of Social Security and the program’s actual condition – and Washington’s disconnect with the broad public support for the program. We also compared the political climate during the last reform of Social Security (in the early 1980s) and today, the role of income inequality in undermining Social Security and retirement security in general.

An edited transcript follows; you can listen to the audio of the entire conversation here, or by using the embedded player found at bottom of this page.

Eric Kingson

Eric Kingson

Q: It’s striking that you are making the case that Social Security’s financingis much more more solid than the public generally thinks. It’s a timely moment to discuss the topic – we just had the latest long-term projection of the federal deficit showing red ink beginning to rise again in a few years, and we see articles in the press saying outrageous things such as this one in The New York Times:

With no changes in policy, aging baby boomers will take more and more of the federal government’s money, with less and less available for anything else. Social Security spending will rise to 5.7 percent of the economy in 2025 from 4.9 percent next year. Health care spending will rise over that period to 6.2 percent from 5.3 percent, while spending to service the national debt will double, to 3 percent from 1.5 percent.

All other spending will shrink to 7.4 percent from 9.2 percent.

You lay out the case that Social Security is healthier than we think, opening the door for some interesting possible new approaches to the program’s design. Can you discuss the contrast of that narrative in the press with what you are proposing?

Nancy Altman: There’s a real irony here. Social Security is very conservatively financed and managed. It cannot pay benefits unless it has sufficient income to cover the costs – it has no borrowing authority. Part of the program’s conservative nature is that it projects out, every year, for 75 years, the income and outgo -every single year for the next 75 years. The program has only been around for 80 years, but beginning in 1941 it started making these long-range projections. That is a much longer projection period than private pensions project out – 20 years – that most other European countries project – which is 40 years. Social Security’s conservative projection has been turned on its head. Whenever you project out that far, you will occasionally show a surplus and occasionally show deficits. All it means is that Congress should look at it, take it seriously and make some adjustments. But it’s not a reason for panic, certainly not a reason for crisis. It’s actually quite conservative.

So we have a projection 20 years in the future that there is a manageable deficit that needs to be filled – about 25 cents on the dollar. That should reassure the American people that this is a program that is being very closely watched – we are the wealthiest nation in the world and we can afford these benefits. But instead, we get these newspaper headlines and politicians saying the sky is falling – and it’s just not true. There’s just no question we can afford this program.

Q: So the 75-year projections – is that the context in which we hear comments or analysis along the lines of “ it’s a trillion dollar obligation.” these infinite horizon arguments? Is that part of an infinite horizon analysis?

NA: In fact, – i’m glad you asked that. Seventy-five 75 years is an outlier, it is so long. But during the Bush administration they started an infinite time horizon. That is really a method of just getting people afraid.

Q: But that isn’t part of the official projection we get every year from the trustees, is it?

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Comments

  1. “we are the wealthiest nation in the world and we can afford these benefits” — Nancy needs to read the works of Dr Thomas Stanley to understand why high income does not equal high wealth. I worked in a Fortune 50 company (i.e., top 50 in revenue in the US) that dropped out of the top 100 in only five years. Income does not equal wealth nor sustainability (no, the ability to tax doesn’t guaranteed anything either). Mark has already convinced me that SS is a good program built on good principles (which is a feat due to my natural skepticism of top down directed Federal programs). Nancy’s cavalier statement only undermined the credibility of the insightful things she did have to say.

  2. Mark Miller says:

    Hi, Bruce – glad to hear I am making progress with you! Not to speak for Nancy but I think her point relates to SS as a percent of GDP. In that context, SS costs are not overwhelming us.

    Cheers,

    Mark

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