Happy 79th birthday, Social Security! You still do your thing really well.

Jared Bernstein
August 15
Jared Bernstein, a former chief economist to Vice President Biden, is a senior fellow at the Center on Budget and Policy Priorities and author of “Crunch: Why Do I Feel So Squeezed?” among other books.

Happy Birthday, Social Security! (AP Photo)

It’s popular these days to go around saying government doesn’t work, it’s all a big boondoggle, we fought the war on poverty and poverty won, and so on.

No question, as I often stress on these pages, our current federal government has some serious functionality issues. But that was not always the case, and some of what we’ve put in place works exceptionally well.

One of the best examples is Social Security, which turned a sprightly 79 years old on Thursday. As the Center on Budget and Policy Priorities’ Kathy Ruffing points out:

• Social Security lifts the incomes of 58 million Americans, and for most of its elderly beneficiaries it’s the single most important income source, accounting for two-thirds of their income on average.

• For more than one-third of retirees on the program, Social Security accounts for at least 90 percent of their income.

• The figure below shows that were it not for Social Security benefits, over 44 percent of the elderly would be poor. With it, that share falls to 9 percent. What’s that again about government programs failing to reduce poverty?

socsec14
Source: Kathy Ruffing, CBPP

This point about the importance of Social Security benefits to its beneficiaries often gets lost in the Washington debate, which, not to put too fine a point on it, tends to be comprised of a lot of rich people arguing that the way to preserve Social Security is to cut its benefits.

Let’s give them the benefit of the doubt and assume they’re just talking about their own benefits. And they’ve got a point: They don’t need the money. But the fact is that the bulk of the program’s resources go to people who really do need the money; only a small share goes to those at the top of the scale. Ruffing shows that only 2 percent of Social Security benefits goes to retirees with non-Social Security income of at least $100,000, and only about 10 percent of benefits goes to people with income of $40,000 or more a year

The implication is that to really “save” Social Security just by reducing its benefits, you’d have to cut into the incomes of the middle-class and poor elderly who depend on it. From a social insurance perspective, you’d have to break Social Security to fix Social Security.

A final point that also pokes holes in those antigovernment mantras: Social Security is a highly efficient program that spends less than 1 percent of its benefits on administrative costs, which is one reason it provides a higher payout per dollar contributed than private retirement annuities.

None of this should induce complacency. Given the critical importance of retirement security, it is essential that policy makers deal with Social Security’s long-term gap between promised benefits and the program’s resources (though even if they failed to do so, Social Security could still pay 75 percent of scheduled benefits once the trust funds run dry in 2033). As shown, that will take more than high-end benefit cuts; new revenues flowing into the program will have to be part of the deal.

So, happy birthday, Social Security. You’re very much appreciated, and though you don’t always hear enough from them, rest assured that there’s a large constituency out there who recognize your value and will work hard to make sure you’ve got many more birthdays to come.

Show Comments
Next Story
Sally O'Reilly · August 15