Here are some headlines you won't see after the government releases new figures on Social Security and Medicare later today:
"Social Security Trust Fund Even Larger Than It Was Last Year"
"Growing Wealth Inequity Will Lead to Social Security Imbalance Later This Century"
"For-Profit Healthcare Poses Threat to Medicare, Federal Deficit, and Overall Economy in Coming Decades"
"Public Consensus Grows For Taxing Wealthy to Restore Long-Term Entitlement Imbalance"
Instead here's what we've already seen:
"Aging workforce strains Social Security, Medicare"
That headline's completely wrong, and yet it's been repeated in dozens of different news outlets (sometimes with minor variations) as they run an improved, but still misleading, news story on Social Security and Medicare from Stephen Ohlemacher at the Associated Press.
Perhaps Trudy Lieberman's Columbia Journalism Review analysis of misleading Social Security reporting had some impact.
Whatever the reason, it's good to see that Ohlemacher's article acknowledges the role that our ongoing economic difficulties have had in slowing revenues for these programs, and that he quotes critics of the Social Security-cutting consensus (although with far less prominence than he does a little-known figure repeating right-wing talking points.)
Even the Washington Post, which is the nation's worst journalistic offender on these subjects, shifted the emphasis with their headline this time. Today they're running the AP article with the header "Social Security, Medicare strained by slow economic recovery, aging workforce."
That headline is 50 percent right -- which is a 50 percent improvement.
Ohlemacher's article was occasioned by the latest report from the Trustees of the fund that handles Social Security and Medicare, which will be released today. He writes that "both programs (Social Security and Medicare) are on a path to become insolvent in the coming decades, unless Congress acts, according to the trustees."
Unfortunately the piece provides no context for the use of the term "insolvent," which most people associate with bankruptcy or running out of funds. As Sarah Kliff explains, nobody is suggesting that either of these programs will ever run out of funds. And when programs have ongoing sources of income, the temporary absence of a surplus isn't the same as "insolvency" as that term is commonly understood.
In fact the report will clearly state that Social Security's Trust Fund has grown to $2.7 trillion dollars, and that Social Security will be able to pay all its benefits in full for a quarter of a century. After that, if no changes are made, it will be able to pay 75 percent of scheduled benefits without changes.
Nor is the "aging workforce" the cause for any of today's concerns, despite the millions of dollars in advocacy money meant to make us believe that it is. We've known about the baby boom ever since it ended in the 1960's, and it was fully addressed in past adjustments to the program. That's why the program was considered perfectly solvent for the foreseeable future after the Greenspan Commission raised the retirement age and made its other adjustments in the 1980s.
The demographics of that "aging workforce" were well known to actuaries by then, since all of those now-aging boomers were already alive and participating in the workforce. So how could an "aging workforce" have caused unexpected shortfalls in Social Security?
The answer, which you won't find in the AP article, is this: As economists like L. Josh Bivens have shown, there's been a sharp increase in income inequity in the last couple of decades. The payroll tax which finances Social Security was reconfigured to capture 90 percent of the nation's income, but because the richest among us are capturing more of our nation's wealth that figures is now closer to 83 percent.
If that hadn't happened there would be no problem with Social Security at all. Understanding the nature of the problem helps us come up with a cure. If wealth inequity is the cause, shouldn't the solution also center on inequity?
Medicare, unlike Social Security, does have very serious long-term financial problems. Why? Because we're the only developed nation that insists in delivering its health care through a system of for-profit hospitals and other medical providers. The for-profit medical/industrial complex has exploded in size over the last few decades, and it's driving our runaway health care costs. The for-profit insurance system which serves most insured Americans under 65 has no incentive to resist for-profit medical care, and arguably even benefits from runaway costs.
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