Public Misinformed by Mainstream Media
Social Security -- Frenzy versus Facts
Below is an "Economics Reporting Review" commentary by Dean Baker, who regularly finds mistakes and biases in the mainstream media.
by Dean BakerPublic opinion polls regularly show that a large percentage of the population does not expect to receive their Social Security benefits. This view is especially common among younger workers. This is a clear case in which the public is badly misinformed, because there is virtually no imaginable economic scenario in which the program could not pay benefits.
The media, including the elite media, deserve much of the blame for the public's misperception. They routinely report on the Social Security trustees' projected shortfall in a way that completely misrepresents the nature of the problem. The latest projections show the program being able to pay all benefits through the year 2037, with absolutely no changes. This is well beyond the projected lifespan of many workers who expect not to see their Social Security. The projections also show that even in years after 2037, if no changes are ever made in the program, it could still indefinitely pay benefits that are higher in today's dollars than what current beneficiaries receive. Furthermore, the money needed to eliminate the shortfall altogether is less than the tax increases put in place in the decade of the fifties, the sixties, or the eighties. The notion that there is some horribly calamity confronting young workers at some point in the not too distant future simply has no basis in fact.
Articles in both the Post and Times this week contributed to the sort of fear mongering practiced by those who want to cut Social Security and/or Medicare. They gave prominent play to a new set of long-term budget projections by the Congressional Budget Office (CBO) which showed the budget falling into a deficit around 2022 and the national debt beginning to grow rapidly after 2030. This projection assumes that the costs of Social Security, Medicare, and other programs grow rapidly as the baby boomers retire and life expectancies increase with improvements in medical technology and overall affluence. Yet, in spite of the fact that people are getting more in benefits and the nation as a whole is much wealthier, no one ever is willing to raise taxes. The CBO reports shows that if this scenario continues for long, the nation will face big problems.
It is not clear what the news in this report is. This budget methodology used in this report would have shown a far more dire picture in previous decades that it does now. (Life expectancies increased in the fifties, sixties, and seventies also.) If this type of methodology had been taken seriously in the sixties, surely the nation never would have adopted Medicare or Head Start, since the long-term budget projections would have precluded such ambitious new programs. Most reports from CBO do not garner much attention. The extraordinary ratio of scare to information in the coverage of this report suggests that it would have been best to ignore it.
Much of the economic news is often reported from the standpoint of the minority who own a significant amount of stock. Several stories fit this bill last week. An article on the September employment data gave readers the "good" news that wages are barely exceeding inflation. Another article told readers that the taxes on stock options are "steep," in the context of efforts to gain special tax treatment for stock options. Since the tax rates on stock options are the same that workers pay on wage income, they are no steeper than the taxes paid by the rest of us.
An article discussing the downturn in the stock market never noted that the Congressional Budget Office projects that corporate profits will actually shrink in real terms over the next decade. Shrinking profits over a sustained period would virtually guarantee a large decline in the stock market. It is strange that the CBO projections, which are treated as the holy grail in the context of budget debates, are completely ignored in other contexts.
Dean Baker's Economics Reporting Review used to be published at www.fair.org -- nowadays it is appearing at www.tompaine.com
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