Dan Anrig has an excellent piece on the health and well-being o Social Security.
Eric Schurenberg, the editor-in-chief of BNET and CBSMoneyWatch.com, is a good friend of mine going back to the 1980s, when we worked together atMoney magazine. We generally get along great — as long as we stay away from the subject of Social Security. But since Eric has just written a piece forThe Fiscal Times describing five purported myths about the program that are actually facts, and since Eric and I both started as fact-checkers, I have little choice but to set the record straight.
The confusion in the article arises from an inadequate presentation of the 1983 Social Security reforms that were signed into law by President Reagan. At the time, the program was genuinely on the verge of a crisis, with the payroll taxes financing the system months away from falling short of the amount needed to pay beneficiaries. The bi-partisan solution entailed accelerating payroll tax increases, a six-month delay in the annual cost-of-living adjustment, a phased-in hike in the retirement age (which amounts to across-the-board benefit cuts), and the imposition of income taxes on some Social Security benefits.
I made a special note of this…
Social Security benefits are earned; reducing them amounts to confiscation.
Social Security benefits are, in fact, directly connected to past wages based on a long established formula that was tweaked in 1983. Because workers throughout their careers have financed the program through an earmarked payroll tax, they have a legitimate basis for believing that they will receive benefits when they retire that are connected to their past earnings. They also have reason to believe that a high political cost should be paid by elected officials who change the terms of that arrangement. Given the near disappearance in the private sector of old-fashioned defined benefit pensions, which also were based on past wages, Social Security is an even more necessary bedrock against the risk of facing an economically insecure retirement.