For decades critics of Social Security have brought to the public a symphony of misinformation and disinformation, embellished with the occasional lie. This effort began to bear fruit a few years ago when most of the public, as well as the press, became convinced that the system needed an overhaul.
Most of the deception is carried out through manipulating the official numbers -- that is, the projections published each year by Social Security's trustees. It is easy to create the impression of impending doom, for example, by pointing to the retirement of the baby boomers (beginning in 2008), the expected doubling of the elderly population by 2035, etc.
But these dire warnings shrink to irrelevance when the other side of the equation is taken into account: namely, the growth of the economy. The system is sound without any change for the next 35 years. To cover the next 75 years, if one takes such projections seriously, would require additional revenues of less than one percent of our national income.
All this is just the voice of the official numbers. But these too are not insulated from the influence of Social Security's adversaries. To see how this influence plays out, look at the fine print.
Earlier this month a panel of experts charged with advising the trustees of Social Security on economic and demographic projections presented its recommendations. The panel was headed by a former Reagan administration official who has made no secret of his desire to cut entitlements for the elderly.
The newspaper accounts, including a Dec. 7 Post editorial, highlighted the panel's recommendation to raise projected life expectancy, which would make the program's finances appear much worse. Meanwhile, little attention was paid to a more important and curious recommendation: The panel lowered its estimate -- as compared with its forecast four years ago -- for growth of wages and productivity.
This is startling, given that for the past four years the U.S. economy has seen exceptionally strong economic growth. Productivity and wage growth have shot up. One could ignore these years as a fluke, but nothing in the record warrants lowering economic projections.
In the four years since the last panel met, real wages have increased at more than twice the rate that the panel projected. If real wages continue to grow at the pace of the past four years, the Social Security system will be solvent for 60 years without any changes.
If the Social Security trustees just used the same wage projections advocated by the 1995 panel, adjusted for some measurement changes by statistical agencies, the system would be solvent for 40 years, even assuming greater longevity. Further, with higher wage growth, the modest changes needed to support the system into the indefinite future would be affordable. In short, using any remotely realistic projection for the growth of wages and the economy, the Social Security system will be solvent into the stratosphere of America's science-fiction future.
The panel's report showed other anomalies too. For example, the productivity growth it forecast is slow compared with the rates of other industrialized nations. If we are to believe these projections, 21st-century America is going to be a fairly poor country compared with the nations of Western Europe.
Nonetheless, without serious public dissent, the panel's recommendations probably will be accepted. Politicians and lobbyists then will use the new numbers to tell people that we have to raise the retirement age, cut Social Security benefits or privatize the system.
There are some important lessons here. First, the process of generating and presenting these numbers is far too vulnerable to political manipulation. The 75-year planning period used by the trustees also is absurdly long. Given the vast uncertainties in the assumptions -- for example, the range of population projections for 2075 varies by 160 million people -- it is all too easy to come up with some kind of financing gap somewhere down the road. This gap, however small relative to future income, is then magnified by Social Security's opponents into a "crisis" that undermines public confidence in the program.
Finally, any shortfall that Social Security may have in the future can result only from a dismal economic performance. So the next time you hear politicians or Wall Street executives say that Social Security needs to be "fixed," ask them to fix the economy instead.
The writers are co-directors of the Center for Economic and Policy Research.