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Alan Simpson's barnyard perspective on Social Security

Alan simpson The government can't bar you from saying things that offend people. But if you happen to be a political appointee of the aforementioned government, it may not be able to continue employing you after you do.

Former Sen. Alan Simpson is being blasted by a spate of liberal groups and lawmakers, senior-citizen lobbyists  and lefty columnists,  with some even calling for him to step down or be ejected as co-chairman of the White House's bipartisan deficit commission. Setting aside for a moment that the job is a thankless one to begin with, Simpson got into hot water  for sending a tartly worded -- OK, snide -- but truthful e-mail  to the head of the Older Women's League, Ashley Carson. In  a Huffington Post piece,  Carson had hyperbolically accused the elderly Simpson of being ageist, sexist and insensitive to poverty because of his criticism of those who routinely resist changes in Social Security. Simpson's e-mail stressed the solvency problems looming in the federal retirement insurance program. But being the sharp-tongued fellow that he is, he couldn't help throwing in a couple of memorable digs at Carson and Social Security recipients in general:

If you have some better suggestions about how to stabilize Social Security instead of just babbling into the vapors, let me know. And yes, I’ve made some plenty smart cracks about people on Social Security who milk it to the last degree. You know ‘em too. It’s the same with any system in America. We’ve reached a point now where it’s like a milk cow with 310 million tits! Call when you get honest work!

MilkI admire politicians who don't try to hide their irritation behind a veneer of false comity or humility. And "call when you get honest work" is a great put-down, especially for someone leading an obscure lobbying group. The fact that people are defending Carson's labors suggests that they believe Simpson lost his right to snap back at critics when he took the co-chairman's job.

The bigger issues, though, are whether the commission should be looking at Social Security at all, and if so, whether Simpson is predisposed to cut benefits. I think Simpson's critics are close to right when they argue that Social Security isn't responsible for the country's fiscal problems. It's not, at least not yet. Until 2037 or so, the reserves built up in the Social Security Trust Fund will cover the shortfall between payroll taxes and benefit claims. Of course, the shift from accumulating reserves (a projected $78 billion this year) to spending them will cause the deficit to grow, but the amount is trivial compared with how much we're already borrowing ($1.34 trillion).

But the long-term problems for Social Security are unmistakable, and the cost to fix them could be huge. Simpson's point in the e-mail to Carson -- and it's a mainstream one among budget analysts -- is that the longer you wait to address Social Security's long-term insolvency, the more of a shock you'll eventually have to deliver to beneficiaries or taxpayers. And remember, the Fiscal Responsibility and Reform Commission's mission  is not just to come up with a plan to stop the debt from growing in the near term, but also to "address the growth of entitlement spending." That puts Social Security smack in the middle of the commission's to-do list.

That leaves the question of whether Simpson belongs on the commission, now that he's likened Social Security to something other than a sacred national treasure. I won't try to parse his comment, but it certainly sounds as if he thinks that too many people are benefiting from the program's safety net. That would betray an inclination to reduce or cut off Social Security payments to the wealthy, not to trim them to the poor, which was Carson's worry.

Either way, it's foolish for liberals to want to toss Simpson. He's one of those rare Republicans who compromise in order to reach consensus on major policy issues. That means he might entertain (gasp!) tax increases along with spending cuts to right the fiscal ship of state, rather than the pure-spending-cut approach favored by the congressional GOP leadership. I doubt that spending cuts can solve the problems on their own, especially considering how big a factor Medicare is. But I'm certain that the commission won't go anywhere by jettisoning members who know how to find the middle ground.

Simpson apologized  Wednesday for being too aggressively clever in his own defense. His open letter to Carson doesn't apologize for his stance on the problems in the Social Security Trust Fund, though; instead, he says he cares "just as deeply" as she does about strengthening the program. No mention of how he would do so, and there's the rub.

-- Jon Healey

Upper photo: Alan Simpson. Credit: Reuters / Larry Downing

Lower photo: One of the 310 million potential Social Security recipients. Credit: AP Photo / Seth Perlman

 

Comments () | Archives (19)

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Deficit Hawk

Nice red herring “offended” people!

Social Security is a massive ponzi scheme that will totally SCREW the current generation of workers paying for it, and then screw them again when they turn retirement age. Worse than that: the generation who is about to receive their Social Security retirement benefits is the same generation whose politicians spent the collected revenues from social security on that same generation by issuing worthless I.O.U.s. to the future instead of investing the money for the current working generation’s retirement. Our not too distant future includes a 7 to 1 retiree to worker ratio! We already spend 41 cents of every dollar to pay interest on the national debt. Fix the debt problem, or NONE OF US will have a chair when the music stops playing, and I mean none of us! Our American republic is in real danger from the debt.

Well the Emperor’s new clothes are off folks, and his 310 million tit$ are showing!

Jon Healey

@ Hawk -- Whoa, big fella! I share your overall sentiment, but your numbers are whacky. The ratio of retirees to workers is nowhere near 7 to 1. It's 1 to 3 today, projected to rise to 1 to 2 in 2035 or so and stay there until 2080. See the latest SS trustees report, page 11. Net interest on the debt is projected to be about $185 billion in 2010, which represents a little more than 1 cent out of every dollar spent in the U.S. (i.e., U.S. GDP). As a fraction of the $3.5 trillion in federal spending this year, it represents about 5 cents of every dollar. I realize that using net interest understates debt service because it doesn't count the amount paid in interest to federal trust funds. Gross interest is roughly double net interest, but even there we're still talking about 10 cents out of every dollar spent by the feds. Anyway, I'm not challenging your conclusion, just your, umm, facts.

ugg

You hear all the Boogie Man talk about your Social Security. The only Boogie Man that is trying to kill your Social Security is the people that pay along with you, part of your Social Security Premiums.
To get out of paying his share of your Social Security, someone is hiring and using scare tactics telling you that when you retire it will not be there for you because too many people are drawing it and not enough people are paying into it. He is right about not enough people are paying into it because he and many more like him make EVERY EFFORT TO GET OUT OF PAYING HIS AGREE UPON SHARE SINCE 1935 WHEN IT CAME INTO EXISTENSE.
To avoid paying benefits on their employees, employers use part time help instead of full time help, they invented independent contractors to do the same work as they did when they were their employees. They outsource their work. This way they are paying peace work instead of hourly work. They bought and paid outlandish prices for automation development equipment. All of this to maximize their profits and avoid paying employees benefits.
If our legislators looked at this today and reviewed the era in which these regulations were implemented, they could see how the system became obsolete because of modern technology. Requirements for paying in to Social Security is as obsolete as the 1949 ford. Social Security needs modernized to maintain and justify the 40 plus years that all workers plus the low wage blue collar workers have faithfully sold their body for over those years.
The real problem with Social Security is---While some employers pay into it faithfully----Other employers look for and find loop holes to avoid paying their share into the Social Security fund. This is where the short fall comes from. It is as simple as that.
Some employers pay into the fund. Some employers find a way to get out of paying their share.
The answer is---figure the fraction there of, for every man hours spent on all items and services rendered and this very small insignificant droplet of a fraction of a cent will solve many to all problems related to everyone’s retirement. After 75 years, even a house needs modernized.

Dick Battin

Has Mr. Simpson or anyone looked into requiring everyone to pay into Social Security? It seems only part of the work force have to pay into S.S. whereas Govt workers, Federal and State often are not required. They often have much better retirement systems as well as health plans. My private retirement system subtracted the SS benefits I payed into and the Govt has reduced them more.
My point is to expand the paying base and the payout can be restricted to the ones with more income. It is a SOCIAL responsibility isn't it. Both the Republicans and Democrats should understand that!!!

Dick Battin

J R in WV

Social Security is not an entitlement program in the normal sense of that phrase. We pay for Social Security; it is an insurance program run by ourselves, our government we elect each time we go to vote.

So anyone who wants to change Social Security and starts by calling it an entitlement program has already lied about the program they claim to be fixing.

You're absolutely correct I feel entitled to collect Social Security as defined on the statements I receive periodically from the Social Security Administration. I've already paid for those benefits!

Social Security can be made solvent into the deep future with very minor and painless adjustments. The easiest and fairest modification would be to eliminate the cap on the deduction so that high-wage earners pay just as middle-income and lower-income wage earners do: on all the money they earn!

Many other tiny adjustments could be made that will bring the program into full solvency. None of them require placing federally collected Social Security Insurance funds into play in the wildly insecure stock market. If any of the privatization programs run up a flag pole by republicans were in effect when the housing bubble burst and the banks failed, every retiree in America would be starving, and foreclosed into the streets. They would be coming for their republicans with pitchforks and torches, and rightfully so.

People who hate the federal government hate America and everything it stands for. Without a strong government and FDR we would speak Japanese west of the Mississippi and German in the east, and all we would need to know is "Yes Master"!

We the people ARE the American government, and those who are deluded into thinking otherwise should not be allowed out alone without a parent or guardian as they are likely to do themselves a harm. We can take care of ourselves, and the way we in America have chosen to do that is to invest our faith in each other and in democratic Federal government.

Anyone who doesn't like that decision should go elsewhere.

pasquino

LOL. "Call when you find honest work." That's great.

Who's paying the salaries at the Older Women's League, and Ashley Carson's salary, by the way?

Can you track that down Jon?

Hub

Simpson must go ASAP
It is apparent that Simpson has know idea what causes the deficit. Social Security has not contributed to the deficit at all. I can't understand why they are even worried about it because it isn't going to go broke until 2037. Can you imagine anyone in govt today worrying about something that may happen 27 years from now? There lucky to come up with the money they owe for tomorrow let alone 27 years from now. If it is close to going broke someday they can just stuff some money in it as they did for the banks, insurance companies, car companies, housing markets etc. etc. If they are that concerned Congress should pay back all the money they have pilfered from Social Security coffers over the years.
The program has run well ever since it's inception and has paid many seniors right on time when they said they would. It is probably the best run govt agency running today. Leave it alone and let it do what it has always done. Pay out the money that so many have contributed into it. I say get Simpson out of office and anyone who helped put him on this commission.

l own myself

Call when you get honest work! That's calling the Kettle Black Alan Simpson, Most of your life has been in Government in one way or another ,

http://bioguide.congress.gov/scripts/biodisplay.pl?index=s000429

Here is a Guy who will collect numerous Government Pensions and sat on the Social Security Subcommittee, also Co-chair of Obama debt panel and look at what they have increased the Debt levels to. Great Job Alan or is it Elitist Alan?
We made promises to the "little people" to pay S.S. Why don't you try and keep a promise , You and your Double Dipping Government Officials forgo multiple Pensions and create some middle class jobs......like maybe 20 million good paying jobs? I have one for you..."Get a Clue"

pappyg


This Wyoming cowboy has been bucked off of one too many broncos, and now wants to strap a saddle on the horse he’s already rode to death (SS), dig in his spurs, give a hearty ya-hoo, and somehow magically breathe life into it. Mr. Simpson, I know a little bit about a cow’s udder as a product of early 40s life on the farm in NE., I’ve pulled my share of them. One thing I learned from that experience was that when you leave raw milk set for a period of time, the cream separates and comes to the top. My friend, your 2% dialogue will never see the top of a cream can. Simply put, you don’t possess enough butter fat. Now, you challenged Ms. Carson by saying "If you have some better suggestions about how to stabilize Social Security instead of just babbling into the vapors, let me know," I don’t know Ms. Carson, but I am offering to take her place, I do have a better idea, and my guess is you won’t have enough balls to accept my challenge, but if you do go to www.socialsecuritysolution.org and bone up; then let’s saddle up, and get it on. Fox, MSNBC, you name it, or maybe my “Rented Mule” radio show.

Mitchell Young

"He's one of those rare Republicans who compromise in order to reach consensus on major policy issues."

After the dismal failure of the 'Simpson-Mazzoli" act, aka the first amnesty for illegal immigrants, why should we trust this guy with anything? Something like 2.5 million illegals were amnestied, but the promised enforcement of immigration laws was obstructed by ACLU and MALDEF types, and also pretty much ignored by a succession of administrations. Result, Simpson's great bipartisan challenge has helped quadruple the number of illegal immigrants here.

anon

The better term is that it is a postmodern trust fund.

The "fund" consists of bonds issued by the government that ONLY be sold back to the government FOR OTHER CASH.

Postmodernists would say that a trust fund is just a language construction and we should'nt care if there actually is not money in it, because God damn it, we made it up so its true!

P J Evans

It's actually only hard to fix Social Security *if you're a politician*.
The best fix is raising the tax cap on income - it's currently about $110,000, and should be raised to at least $200,000 and indexed to inflation.
Another part is getting unemployment down to a reasonable level - not more than 5 percent - and keeping it down.

And it would be nice if Simpson would stop lying about the situation. Social Security is not contributing to the deficit and longevity is not a problem.

Jon Healey

@J R -- Technically, Social Security *is* an entitlement program -- it awards money to any qualified recipient based on a formula that's not subject to annual appropriations. And although the amount you receive is influenced by the amount of taxes you paid, it's not limited by it. Nor do your taxes pay for *your* benefits -- they pay for the benefits collected by today's beneficiaries.

@Hub -- The fact that Social Security will be able to pay benefits until 2037 or so is because lawmakers in 1983 looked out 30 years into the future and saw what would happen when Baby Boomers started retiring en masse. Yes, they were also responding to immediate problems in the program, but the fix they enacted that year put tax increases in place in 1988 and 1990 that addressed the long-term issues, not short-term ones. By your let's-wait-until-it's-broken reasoning, we shouldn't have a trust fund at all.

@anon -- The non-marketable bonds in the trust fund will have real value as long as the federal government is able to borrow the money needed to redeem them.

@PJ -- Agreed on Social Security not contributing to the deficit. Longevity may not be a problem, but it is an issue because it affects the amount paid in benefits. If longevity increases faster than currently anticipated, the trust fund will be depleted sooner; if it increases more slowly than anticipated (or shrinks, heaven forbid), the trust fund reserves will last longer.


bobc

This statement in Jon Healey's piece is in error: "...the reserves built up in the Social Security Trust Fund will cover the shortfall between payroll taxes and benefit claims."
There is no cash in the Trust Fund. As the FICA taxes rolled in over the years, the cash has all been transferred to the general fund and spent, replaced by special bonds held by the Treasury. But, there's nothing behind those bonds either. When we need to draw on the Trust Fund, the Treasury will have to borrow the money, selling new Treasury bonds in the market. Our grandchildren who will have to redeem those bonds in future. Those who charge that Social Security is a Ponzi scheme are correct. It's time to stop deluding ourselves. We have a big problem, and it won't go away.

Jon Healey

@bobc -- The fact that the trust fund holds nothing but non-marketable bonds doesn't mean it's empty. That's silly -- the bonds are backed by the full faith and credit of the federal government. When it comes time to cash them out, yes, the feds will have to borrow that money from somewhere else (unless they magically turn the current budget deficits into huge surpluses). That exercise will exchange intergovernmental debt for public debt, which could very well affect the macroeconomy (e.g., by raising the cost of borrowing). But from the government's perspective, I think, it's not borrowing more, it's just switching lenders.

Mitchell Young

Per capita GDP has gone up, in real terms, but wages have been stagnant. Without actually looking in up, I imagine that means that a greater amount income is now 'earned' via rents, interest on financial instruments, etc. It would make sense to institute social security tax on those income sources also.

Look at it this way, there are going to be fewer workers supporting more retirees. But for decades, even centuries, there have been fewer and fewer workers producing more and more, thanks to capital and technology. We need to skim some of the revenue from that extra productivity -- it hasn't been going to workers for the last 3-4 decades -- and use it to support retirees.

David Blum

The solvency issues for Social Security doesn't exist, because Republican politicians conflate the Social Security trust fund with the general budget.

The trust fund is fine, viable for decades, with a few tweaks, over 50 years.

The budget is in deep trouble, and that's why lying Republicans like this hack want to include. That's stealing from the honest working who paid into the trust fund.

This another issue where the Republican lies are so easily demonstrable it's laughable.

DRM

"Our not too distant future includes a 7 to 1 retiree to worker ratio!"

This is absolutely false. You are saying 85% of the American workforce will reach retirement age soon. Where is your evidence for this?

Jon Healey

@David -- According to the Social Security trustees' latest report, the program has a long-term (75-year) unfunded liability of $5.4 trillion. That's a solvency problem. Not sure what you mean by "a few tweaks," but if Congress does nothing until the trust funds are emptied in about 27 years, benefits will have to be cut by 22% or payroll taxes hiked by about a third (again, according to the trustees' report). If Congress acts sooner, the changes can be less dramatic.

You've got a valid point about conflating Social Security issues with problems in the federal budget, but the two are intertwined to a certain degree. As I mentioned in my last comment, when Social Security starts drawing down its reserves, the federal government will almost certainly have to borrow $1 from the public for every $1 paid out of the Social Security trust fund. Viewed from a budget wonk's perspective, that means the government will shift from borrowing money from itself (i.e., the SSTF reserves) to borrowing it from the public (i.e., people who buy T bills). Such a shift has all sorts of macroeconomic implications, but suffice it to say that markets pay attention to public debt, not intergovernmental obligations. The more that the latter becomes the former, the worse the U.S. balance sheet looks to the investors (or, more accurately, the lenders) we rely on to help fund the government.


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