Deficits not caused by entitlements

In his Thursday column, Ted Van Dyk avoids the usual overheated rhetoric about Social Security, admitting that, at most, modest adjustments will keep the system strong. And he's right that soaring federal deficits and skyrocketing health care costs are serious problems we must address. Unfortunately, Van Dyk clouds the real issues by suggesting that future Social Security and Medicare recipients should bear the weight of today's runaway deficits and collapsing health care system.

While Van Dyk pits baby boomers against their parents, grandparents and kids, one of the great things about Social Security is that it unites us all across the usual divides of generations, class, race and even urban and rural residence. Social Security affirms the value of all work, whether performed by an executive or janitor, child-care teacher or college professor, business owner or farm worker. Social Security recognizes the bonds of family by paying family and survivor benefits. It acknowledges that the well-being of each one of us is tied to the well-being of our whole community. It reflects the best values of our nation by assuring the dignity of those who are elderly, disabled, widowed and orphaned.

Social Security is financially healthy, also. Both the Social Security Trustees and the Congressional Budget Office have made long-range projections. We hear a lot about their predictions that in some future decade, either the 2040s or the 2050s, Social Security may run short of funds. We rarely hear that there will still be lots of money in the system. Because workers keep getting more productive and wages go up faster than inflation over time, Social Security collects more and pays new retirees higher benefits every year. According to the CBO report published this month, when workers born in 1970 retire, they will get Social Security benefits worth 16 percent more after inflation than workers born in 1940. The CBO predicts that after 2052 the current level of payroll taxes will pay for only about three fourths of scheduled benefits, but retirees then will still have higher incomes than retirees do now, even without a raise in payroll taxes.

It also would be easy and relatively painless to add money to Social Security by eliminating the cap on payroll deductions. Earnings of more than $87,900 aren't subject to Social Security taxes, so Bill Gates and Alex Rodriguez pay no more into the system than most pharmacists or engineers.

In short, Social Security finances are sound, and it's a valuable program we easily can afford as our population ages. Rushing to slash benefits in a program that is successfully keeping 90 percent of seniors and more than 5 million children out of poverty is unnecessary and will cause lots of harm.

We do have very real problems today. We're racking up piles of debt because of reckless tax cuts primarily for the wealthiest Americans, pursued despite a costly war. Medical costs are spiraling out of control, while millions lack insurance. At 14 percent of our gross domestic product, the United States pays far more for health care than any other country in the world, yet, according to the World Health Organization, more than 20 countries have longer life spans and fewer infant deaths. Unfortunately, far too many commentators from Federal Reserve Chairman Alan Greenspan to Van Dyk are suggesting we deal with these problems by slashing Social Security and Medicare benefits. But these programs and the aging of the baby boomers are not causing current deficits or medical inflation.

On the other hand, soaring deficits and medical costs are threatening Social Security and Medicare. The fact that in 20 years more of our population will be senior citizens means we have to deal with the deficit and our health care mess now. The tax holiday for the super rich and multinational corporations has to end. Those who've benefited the most from the privilege of living in America have to once again pay their fair share. And contentious and painful as it may be, we have to overhaul the inefficient hodge-podge of health care coverage into a system that covers everyone and controls costs. We can no longer afford to pay 50 percent more than other developed nations do for health care, especially when we're getting such lousy outcomes.

Social Security is one of the most successful programs we've ever created. It reflects the best of American values. Let's turn our attention to the real problems we're facing as a nation, and stop trying to fix something that isn't broken.

Marilyn P. Watkins, Ph.D., is the policy director for the Economic Opportunity Institute in Seattle.

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