It's never a surpise to see yet another Wall Street Journal
opinion writer extolling the values of privatization, vouchers and the demonization of the average American. However, this opinion piece written by former member of the Reagan administration was particularly ridiculous. In a nutshell, he claims that American seniors will become millionaires thanks to Social Security and Medicare. No, really---that's what he said.
Readers may recall the 1950s TV show, "The Millionaire," which portrayed stories of individuals who were given a "no strings attached" gift of money by an anonymous benefactor. Each week in one of the show's opening scenes, a man representing the wealthy benefactor, John Beresford Tipton Jr., knocked on an unsuspecting recipient's door and announced: "My name is Michael Anthony and I have a cashier's check for you for one million dollars."
That TV program is scheduled to return next year as a reality show, and the new recipients will be the typical husband and wife who reach age 66 and qualify for Social Security. Starting next year, this typical couple, receiving the average benefit, will begin collecting a combination of cash and health-care entitlement benefits that will total $1 million over their remaining expected lifetime.
provides an easy to understand description of why this analysis is flat-out wrong:
All of this, Cogan says, is according to his own calculations based on government data. It's all wrong, however, and while it's often difficult to say with any certainty whether someone is intentionally lying to people or simply making an honest error, in this case it's clear.
Cogan's sleight of hand is simple: when he gives the amount this average couple paid into the two programs, he adjusts for inflation to current dollars. On the benefits side, he doesn't – he uses future dollars, which results in a larger number. John Cogan is a professor of public policy at Stanford University; every one of his students knows that he or she would get an F comparing inflation adjusted numbers on one side of the ledger to nominal dollars on the other – it's apples and oranges and it's about as mendacious as one can get.
Our Executive VP and Acting CEO, Max Richtman, also challenges the clearly political inter-generational warfare angle of this piece in his letter to Wall Street Journal editors. Since there's not a chance his letter will ever see print, we offer it to you here:
Maybe John Cogan’s neighborhood is full of “Millionaire Retirees” (The Millionaire Retirees Next Door, May 12th) but out here in the real world, one out of three seniors in the United States is economically insecure and living under twice the federal poverty line, at $22,000 per person. Contrary to Cogan’s “greedy geezer” mythology, the average annual Social Security check is a modest $14,000 and it doesn’t come from an “anonymous benefactor”.
While portraying Social Security and Medicare beneficiaries as millionaires fits the absurd rhetoric so popular in conservative circles these days, it conveniently ignores the reality that working Americans of all ages and political parties understand: the government doesn’t fund Social Security, workers and their employers do. Social Security keeps millions of families from poverty each year while Medicare provides life saving health coverage for a population which private insurers won’t serve without massive government subsidies. No one is getting rich on Social Security and Medicare, although clearly Wall Street and private insurance companies would like to do exactly that, while also passing the bill along to middle-class America.
Executive Vice President/Acting CEO
National Committee to Preserve Social Security and Medicare
10 G Street, NE, Suite 600
Washington, DC 20003
CATEGORY: [Budget], [entitlement reform], [Medicare], [privatization], [Social Security]
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