APRIL FOOL.

Frederic Decker illustrates why political economy is too important to be left to sociologists.  "Social Security Is Not Adding a Penny to US Debt."  Really, Freddy?

Busting the debt myth can start with a report from the Government Accountability Office where stated how for years the Social Security program “built up reserves” from revenue collected that “were invested in federal government securities, reducing the amount that must be borrowed from the public,” including from other countries, to cover federal deficits. (By law surplus funds in Social Security have to be invested in government securities.)

Surpluses were possible, of course, given Social Security is largely funded by its separate payroll tax. Not totally by general revenue as likely some surmise, or haven’t considered questioning, from those typical charts on federal spending.

And, relatedly, not enough is made of this fact: Today, Social Security (formally, the “Federal Old-Age and Survivors Insurance [OASI] Trust Fund”) actually owns more U.S. debt, $2.7 trillion in Treasury securities, than the top two foreign governments, Japan with securities valuing $1.1 trillion and China with under $1 trillion.

That's reassuring, in the same way that a Bernie Madoff or Sam Bankman-Fried can assure the earliest bondholders that current contributors are (still) helping to build up reserves.  Until the building up stops.  Which it's about to do.  Remember those brief shining moments of federal surpluses back when lying about diddling an intern was not impeachable conduct?  Those were the Social Security taxes of prime-age Baby Boomer and Thirteenth Generation workers, which, by law, could be spent by Congress as long as the offsetting large treasury bill was held by the so-called Social Security trust fund.  Those might be assets to the Social Security Administration, but those are liabilities to the general taxpayer as the so-called trust fund redeems those bonds.

If you're Freddy, though, you elide reality by deflecting to the Bad Orange Man, whose dalliance with an exotic dancer is not impeachable.

It is true Social Security’s dedicated revenue in 2021 was not alone sufficient to cover benefits paid, as detailed in a recent report by the Social Security Board of Trustees. Although, it was sufficient in the preceding year with additional securities purchased then. But in 2021, the government had to reconcile payment for OASI-owned federal securities cashed in to cover that year’s shortfall. Put differently, installment payments on the loan from Social Security came due. This, admittedly, entailed some additional spending of general revenue. But not in sums making the program a major debt maker, particularly not relative to the deficit amounts caused by tax cuts during the Trump administration.

Freddy, you ignorant sociologist, those are still pennies added to the federal debt. You should have abandoned the column and written something for Sage or Taylor and Francis instead.

But no, he has to double down on a wrong argument.

Shortfalls are now predicted to happen regularly each year whereby reserves (that is, owned securities) in the OASI trust likely will be depleted by 2034 if no reforms. Then only an estimated 77 percent of benefits due would be payable. But annual payments on securities cashed in isn’t á priori a dominant driver of deficits and debt, as the preceding paragraph reveals.

It's. Adding. Pennies.

But Freddy decides to pile error upon error.

Aside from erroneously blaming Social Security for deficits swelling the debt, there is also a related and persistent argument that cutting benefits via raising the retirement age to 70 is necessary to control expenditures given the increasing life expectancy over the decades. But issues around life expectancy, ironically, actually contribute to disproportionate harm incurred by raising the retirement age again. Yes again, since a 1983 law increased the age from 65 to eventually 67.

Research has shown those of lesser means have experienced smaller improvements in mortality over the years. Conceivably, as life expectancy declined during the Covid-19 pandemic, this discrepancy was magnified. In any case, what is known according to the Congressional Research Service is raising the retirement age to reduce costs “would [because of their lower overall life expectancy] affect low earners disproportionately (i.e., reductions in their lifetime Social Security benefits would be considerably larger than for high earners).” By the way, privatization of Social Security would also disproportionately harm the well-being in retirement years of those with lesser means.

Research by the Social Security Administration also revealed that a sizable portion of those retiring before the full retirement age had health problems impairing the ability to work. And these early retirees more likely worked in physically demanding blue-collar occupations. This and other studies led the Congressional Research Service to observe that “early retirees who have work-related health impairment…would be disadvantaged” by an increased retirement age, which worth noting they also were by the earlier increase legislated in 1983.

I'd be more favorably disposed to engaging that argument if it acknowledged, anywhere, that the 65 years of age for retirement that the Brains Trust came up with in the 1930s was established in such a way that about half the people paying into the Ponzi scheme trust fund would have departed this life before they were eligible to collect, and many of the people who did collect did not receive the full value of their payments into their so-called accounts.  The "disproportionate effect" on people of lesser means, in physically demanding occupations, was a design feature from the beginning.