Two views on Social Security

A Times editorial on Wednesday called on Congress to shore up Social Security quickly, as its looming insolvency would only get more difficult to address as time dragged on. But Business columnist Michael Hiltzik, in a piece that ran the same day, wrote that Social Security benefits should be expanded. Hiltzik pointed out that the Social Security Trust Fund ran a large surplus last year.

Noting the difference in outlook between the two articles, reader Bob Murtha of Santa Maria wrote:

“Times editorial board members and Hiltzik need to get together to compare notes. On the same day an editorial called for swift action to prevent a shortfall in the Social Security Trust Fund, one suggestion being either to raise the payroll tax by 20% or cut the benefits by 16%, Hiltzik wrote that benefits should be expanded.

“Hiltzik noted, among other things, that the program ran a surplus of $69 billion last year. He derided the view that expanding Social Security will bankrupt America as ‘the mating cry of the haves-and-want-mores.’”

“The articles are extremely contradictory. So much for punditry.”

Editorial writer Jon Healey responds:

It’s not unusual for The Times’ editorials and news columns to reach different conclusions. That’s because we on the editorial board don’t interact with writers on the news side. Our editorials represent the consensus of the board’s nine members, and columnists speak only for themselves.

The apparent contradiction cited here reflects a difference in focus. As Hiltzik noted, the annual report by the trustees who oversee the Social Security Trust Fund disclosed that the fund grew by $69 billion in 2011. But the report also said that payroll tax revenue last year fell short of the amount paid in Social Security benefits by $45 billion. The fund had a surplus only because of the interest earned on its assets: more than $2.5 trillion in special Treasury securities.

Thanks to those assets, Social Security probably has enough on its balance sheet to pay full benefits for two decades. But the trustees expect the gap between payroll tax revenue and benefit payments to grow rapidly later in the decade, with interest-fueled surplus turning to deficits around 2021. As a result, they project that the trust fund will be emptied by 2033, at which point payroll tax revenue will cover only about 75% of the cost of benefits.

Avoiding that steep cut will be costly, mainly because there are so many people on Social Security — about 55 million today, approaching 90 million in 2033. The sooner Congress adjusts the program to bring more money into the trust fund, reduce the growth in benefit costs, or both, the less drastic the changes will have to be.

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