Social Security: Don’t Just Fix the Symptom, Solve the Problem

By Pat Conover, Policy Advocate, United Church of Christ, Office for Church in Society and Chair, Interreligious Social Security Task Force

The 1998 Report of the Social Security Trustees predicts a long-range financial problem for Social Security. There have been two primary policy proposals which respond to the problem as posed by the Trustees. Those favoring individual private accounts are intent on taking advantage of a perceived vulnerability in Social Security to alter the basic purpose and funding mechanisms. Criticisms of this hostile response to Social Security can be found in other places. President Clinton’s plan directly addresses the symptom of a predicted long-range financial problem by investing much more money in the Old-Age, Survivors and Disability Insurance Trust Funds. The President’s plan defends the basic purposes of Social Security and deserves to be passed. But the President’s plan does not address the problem that leads the Trustees to predict the long-range financial problem.

The usual understanding of the predicted long-range financial problem is that there will be a lot more benefits to pay when the Baby Boomer’s begins to retire and that retirees are living a lot longer and will receive more benefits per person. This is an accurate, but significantly inadequate, understanding of the problem named by the Trustees.

The big problem identified by the Trustees is their prediction that the economy is going to grow about half as fast in the next 75 years as it has in the past 75 years. If that happens, it will mess up the stock market, the revenues for general government operations, the lifestyle of every generation and Social Security. Because Social Security is such a big program, it is going to be hard to fix without fixing the whole economy.

Why do the Trustees think the economy will slow down? The core of their answer is that they are predicting a VERY slow growing work force. Such a slow growing work force would cause a slow growing economy, which would cause more unemployment and lower pay, which would cause less payroll tax revenue to support Social Security. The slow growth of the work force will become very noticeable, they predict, when the Baby Boomers are retiring from the work force and comparatively few new workers are entering the work force. Fewer new workers will be entering the work force because the birth rate in the United States has been low for a long time, and they predict it will stay low.

The Trustees have also offered a more optimistic (low cost) prediction about the financial future of Social Security, a prediction of no problem at all. For the key birth rate variable, the difference is between 1.9 versus 2.2 children born per woman age 15 to 45. This is not a huge problem to overcome. Social investments to improve the work force can make up this difference. The 106th Congress needs to devote more attention and resources to education and training, to helping people move from welfare to work, to overcoming disability, to encouraging older workers who are able to stay in the work force, to ending discrimination against various categories of workers, to increasing the minimum wage and to strengthening child care and health care benefits. In addition, new attention needs to be paid to welcoming immigrants to the United States and helping them integrate into the work force.