Dean Baker, co-director of the Center for Economic and Policy Research, reminds us of some key points we must allremember as Washington’s fiscal hawks try to persuadeus America can’t afford Social Security– Points which are all too often ignored in the crusade to cut a program which hasn’t added one penny to our national debt.This TruthOut piece is well worth your time and deserves this month’s Networthy Award:

Senator Simpson’s Quick Budget Quiz

Monday 30 August 2010by: Dean Baker, t r u t h o u t | Op-EdPresident Obama is apparently content to have an abrasive and abusive senator’s son sit as co-chairman of his deficit commission. We can assume that these traits were a direct result of Sen. Alan Simpson’s privileged upbringing and he is not going to change now that he is in his late 70s.However, even if the senator is not prepared to embrace norms of civility, it is reasonable to expect that he will do his homework. In order to help him in this process, here is a quick list of study questions on Social Security for Simpson as he carries through his assignment to co-chair President Obama’s deficit commission. Reporters and editors at major news outlets may also want to review these questions, since it seems that they could also use some additional background knowledge on the program.1) How much higher are real wages projected to be in 2040 than today? In other words, how much richer do we expect the average worker to be 30 years from now?2) How did the 2010 Trustees Report change the projections for 2040 wages compared with the 2009 report?3) If we solve the projected shortfall in Social Security entirely by raising the payroll tax, what percent of the gain in real wages over the next 30 years would have to go to pay the tax?4) What percent of real wage gains over the last 30 years was absorbed by the increase in Social Security payroll taxes?5) What percent of the projected long-term budget shortfall is due to the inefficiencies of the US health care system?6) How much wealth should we expect near retirees to have to support themselves in retirement?7) What percent of older workers have jobs in which they can reasonably be expected to work at into their late 60s?Certainly anyone on the deficit commission should be able to answer these questions off the top of their heads, as should any of the people reporting on Social Security or deficits in the media. But for those readers who do not fit these descriptions, here are the answers.1) According to the Social Security Trustees Report, the average real wage is projected to be 48.7 percent higher in 2040 than it is today. In other words, if our kids work 30-hour weeks on average, they would take home about 10 percent more than we do today working 40-hour weeks. Senator Simpson has been known to quip about how our children and grandchildren will be living in chicken coops, but he’s just kidding, right?As a practical matter, most workers have not seen much in the way of wage gains over the last three decades because such a large portion of wage growth has gone to those at the top: people like Senator Simpson and his co-chairman Erskine Bowles. This upward redistribution of income of this period, and the possibility that it could continue, is the reason that most people who are concerned about the well-being of future generations focus on the distribution of income. The impact of any potential increases in Social Security taxes on the typical worker’s income is trivial compared to the impact of a continued upward redistribution of income.2) The 2010 Trustees Report had good news on the wage front. It assumed that health care reform would slow the rate of growth of employer provided health care benefits. This means that wages are now projected to grow more rapidly since Social Security money will be diverted to cover rising health care costs. In 2009, the trustees projected that the average wages would only rise by 37.2 percent between 2010 and 2040.This means that the changes between the 2009 and 2010 Trustees Report imply that wages will be nearly 10 percent higher in 2040 than we previously believed. Everyone saw or heard the lead item in The Washington Post and on National Public Radio: “New Trustees Report Shows Our Children Will be Much Richer.” O.K., maybe they managed to overlook this part of the story, but Senator Simpson knows it.3) Number 3 is somewhat of a trick question, since it depends on exactly the formula we use. The Trustees Report tells us that if we raise the tax tomorrow by 0.96 percentage points on both the employee and employer (1.92 percent in total), then the program will be fully solvent through its 75-year projection period. If we went this route, then it would mean that the tax increase would take up 5.9 percent of the projected wage growth over the next three decades.But we may not want to impose a tax increase like this tomorrow. There is a huge amount of uncertainty about these projections, and the program faces no imminent shortfall. Suppose we raised both side of the payroll tax by 0.07 percentage points annually beginning in 2020 and continuing at least to 2040. Then by 2040, the rate would have risen by 1.47 percentage points on both the worker and employer. This would take up 12.0 percent of the projected wage growth over this period, leaving our children on an after-tax basis just 42.8 percent richer than we are. This doesn’t quite sound like Senator Simpson’s story about our kids living in chicken coops.4) The Social Security tax increases of the last 30 years took 6.8 percent of average wage growth. This is in the same range as the portion of projected future wage growth that may have to go to higher Social Security taxes. The big problem in the story is that people have been living longer through time. If we want to enjoy a growing portion of our lives in retirement, then it will cost somewhat more money. This means that after-tax wages will grow Social Security more rapidly than would otherwise be the case.It is worth noting that the gains in life expectancy also have not been distributed evenly. Most of the gains went to those in the top two quintiles of the income distribution.5) The United States has by far the most inefficient health care system on the planet. We pay more than twice as much per person as people in other wealthy countries with very little to show for it in terms of health outcomes. If we had the same per-person health care costs as any other country in the world, the long-term budget projections would show huge surpluses rather than deficit.6) Senator Simpson has repeatedly held up the image of affluent elderly getting Social Security checks. He talks of seniors driving up to their gated communities in their Lexuses. While this may describe Senator Simpson’s friends, it is not an accurate description of the vast majority of seniors, most of whom rely on Social Security for the majority of their income.This is likely to be even more true of the baby boom generation that is at the edge of retirement. Few have traditional defined benefit pensions. They have seen much of the wealth they were able to accumulate destroyed by the collapse of the housing bubble and the subsequent plunge in the stock market.7) Senator Simpson is still working into his late 70s as is, no doubt, the case with many of his friends also. These leads many deficit hawk types to think all workers should be expected to work until 70 or even older.However, this is not likely to be as easy for most workers as it is for Senator Simpson. Forty-five percent of workers over age 58 work at jobs that are physically demanding or have difficult work conditions.So, there you have it: seven key facts about Social Security, the budget and the well-being of workers and retirees. Senator Simpson should know this information inside out.But does he? Try asking him. If he can restrain his curses and insults long enough, maybe we can find out if he is qualified for the position he holds. At this point, we only know that he has a poor understanding of the anatomy of barnyard animals.

Fiscal Commission Co-Chair Alan Simpson made news earlier this year when he called seniors ?lesser people? in a video interview, and now in an angry email he sent yesterday to the executive director of National Older Women’s League, Simpson says Social Security is “like a milk cow with 310 million tits“.Apparently a blog post Ashley Carson wrote last spring entitled “Enough with the Pink Panthers Bit” just caught Simpson?s attention and ire which inspired his email response:

?I?ve spent many years in public life trying to stabilize that system while people like you babble into the vapors about ‘disgusting attempts at ageism and sexism’ and all the rest of that crap?take a look at the chart on Page 6 which I hope you are able to discern if you are any good at reading graphs ? or anything that might challenge your biases and prejudices. Anyway, have a look at it and if you should choose, you might communicate with me. If you have some better suggestions about how to stabilize Social Security instead of just babbling into the vapors, let me know. And yes, I?ve made some plenty smart cracks about people on Social Security who milk it to the last degree. You know ?em too. It?s the same with any system in America. We?ve reached a point now where it?s like a milk cow with 310 million tits! Call when you get honest work!? Al

Honest work?really? We?d argue that advocating for America?s seniors is pretty honest work.The National Council of Women?s Organizations has written President Obama calling for Simpson?s resignation:

?The facts speak for themselves, but Mr. Simpson suggests that anyone supporting people who most need help and who deserve the benefits they paid for must be dishonest or stupid. Such open contempt goes beyond the pale and cannot be tolerated from someone in such a position of authority.?

Here is another good rap up of the issue in this Huffington Post piece.

We all know the real-life retirement picture for Americans is quite different than theridiculouscaricatureof old catsliving “in gated communities and driv(ing) their Lexus to the Perkins restaurant to get the AARP discount”. This “greedy geezer” myth so frequently proferred by some in Washington, makes for good newspaper copy but of course bears noresemblance to the frightening reality facing millions of seniors who’ve seen their retirement savings decimated, their home values plummet and face new threats of cuts to Social Security through raising the retirement age, means testing or countless other ways.That’s why we were especially glad to find a CNN piece that actually took the time to step outside the confines of Washington deficit-mania to ask a simple question: Why did you take Social Security early?While the answers don’t surprise us because we talk to seniors each and every day…these answers certainly don’t fit the greedy geezer mythology promoted by so-called “deficit hawks” looking for away to pay for years of failed borrow and spend policies that have absolutely nothing to do with Social Security.Here is just a sampling of the comments. We really recommend you read the entire piece:

We’ve been dutifully searching for employment to no avail?We both are in good health and have 80 years of experience between us to offer. Although we each have a pension and some 401(k) funds, we have to start taking Social Security in order to make ends meet. It deeply saddens us to be in this position, but we have no choice. Paul Henderson, 62At age 62, I was laid off from my job? I see no jobs on the horizon for anyone, let alone someone of my age. Still, I’m looking. Elaine Armstrong, 63That was just the beginning as I found myself in the world of age discrimination. Even though I had years of tech work for companies like Sony, Microsoft, etc. I was unable to get work. Then in 2005, my wife’s company decided to shut down her office. It took her 5 years to get a part-time job! Daniel Ryan, 63

In poll after poll, the American people of all ages and political persuasions continue to send Washington a clear message?cutting Social Security in the name of deficit reduction is not ?fiscal responsibility?.Thelatest research survey on investment and deficit reduction was done by Greenberg Quinlan Rosner commissioned by the Campaign for America?s Future and Democracy Corps, with support from MoveOn.org; the American Federation of State, County and Municipal employees, and the Service Employees International Union.They describe their findings this way:?Voters are united on this key point: Social Security and Medicare are off-limits as a way to reduce the deficit. It is the threat to Social Security that leads many voters to prioritize deficit reductions. Voters instead want to see higher taxes on top income earners and big corporations.As Social Security celebrates its 75th anniversary this week in the midst of this troubled economy, voters across the political divide want these programs defended.68 percent said they would oppose making major spending cuts in Social Security and Medicare to reduce the deficit, while 28 percent said they would favor cutting those programs. That included 61 percent of Republicans and 56 percent of independents.Strong majorities support progressive solutions for addressing the federal deficit: 63 percent back lifting the Social Security cap on incomes higher than $107,000 a year; 64 percent would favor eliminating tax breaks for corporations that outsource jobs; 62 percent would support a tax on excessive Wall Street bank profits.“These results mirror results of our National Committee Foundation poll conducted earlier this summer in which only 2% of Americans believe Social Security is a major cause of the deficit with 77% opposing any changes in Social Security as part of a deficit reduction plan.Theye also echo what Americans told AARP in another recent poll in which 85 percent of adults oppose cutting Social Security to reduce the deficit; 72 percent “strongly oppose” doing so.It?s clear the Washington Disconnect between working Americans and policy makers on the issue of Social Security couldn?t be larger.