Last week, we looked at one zombie Social Security lie that keeps coming back from the dead every time the Very Serious People begin to talk in Very Serious Tones about the problems of the system: the lie that individual life spans are so increasing that it will bankrupt the system. That's hogwash, and we quoted from Nancy Altman's excellent The Battle for Social Security: From FDR's Vision To Bush's Gamble to disprove it. Altman is one of the premier experts in the country on Social Security and pensions, having served as Alan Greenspan's assistant when he chaired the bipartisan committee that developed the 1983 amendments to the program.
This week, we're tackling another common zombie lie, even echoed here at Daily Kos (no offense to the commenter; it's a common fallacy and one I've seen used many times out of genuine concern for the health of the program). The lie: The worker-to-beneficiary ratio has so drastically changed from inception that the program is doomed. Doomed, I tell you! Doomed! Why decades ago there were [fill in the blank … 40, 25, 16 …] workers to every beneficiary and now it's down to three workers for every beneficiary. It's unsustainable!
Except that it was ... you know ... planned exactly that way. From the beginning. I'm going to take the liberty of lifting quite a bit here from Altman's book, with emphasis added in the crucial places, in the hopes that readers can whip this out on occasion to fight this zombie lie:
… [George W.] Bush sought to prove the point that Social Security was unsustainable through the use of a terrible deceptive and misleading factoid. The president announced, "And instead of sixteen workers paying in for every beneficiary, right now it's only about three workers."
"Sixteen workers paying in for every beneficiary" is a meaningless statistic that never affected policy in the slightest. The 16-to-1 ratio is a figure plucked from 1950, the year that Social Security expanded to cover millions of theretofore uncovered workers: farm workers, domestic workers, and others. Those 1950 amendments followed the recommendations of the 1948 advisory council ….
… all pension programs that require a period of employment for eligibility, private as well as public, show similar ratios at the start, because all newly covered workers are paying in, but no one in the newly covered group has yet qualified for benefits. The president could just as accurately have said that in 1945, the ratio of works to beneficiaries as 42 workers paying in for every one beneficiary or the equally accurate but misleading ratio from 1937, 26 million workers paying in for about a dozen beneficiaries.
… what is important is not the worker-to-beneficiary ratio at the start of the program but the ratio when the program reaches maturity. Consistent with the meaninglessness of the 16-to-1 factoid, the worker-to-beneficiary ratio was halved to eight workers for every beneficiary within five years, and by 1975, the ratio was where it is today. The 1994-1996 advisory council had not agreed on much, but it made one very valuable contribution. Its report included the appendix that stated that "the fundamental ratio of beneficiaries to workers was fully taken into account in the 1983 financing provisions, and, as a matter of fact, was known and taken into account well before that."
None of this mattered, of course, to those determined to privatize the program. Bush's 16-to-1 ratio, rolled out in his 2005 State of the Union address, has taken on a life of its own—an alarming number plucked out of the ether of context that has nothing to do with reality. Nevertheless, even program supporters wring their hands over it.
The fact is, as Altman points out, this ratio was anticipated. She cites the stats marvels who first worked on the program at its creation, listening to Bush in 2005 in horror:
Bob Myers watched Bush on television from his home right outside Washington and stared in disbelief. In 1934, not only could Myers foresee the world as it changed, he had forecast these changes with great specificity. He was the one who had crunched the numbers for Roosevelt's Social Security proposal. Myers and Otto Richter, the senior actuary with whom he had worked, had been extremely farsighted. Myers knew, in 1934, that people in the twenty-first century would live longer and draw benefits longer.
As it turned out, Myers and Richer were a shade too conservative in their projections, believing the percentage of the population that would be elderly in the future would actually be higher than it turned out to be. Specifically, in 1934, he and Richter projected that, in year 2000, 12.7 percent of the population would be age 65 or older. How accurate were they? According to the 2000 census figures, the percentage of those aged 65 and over was 12.4 percent of the population.
Believe it or not, despite the fact that they didn't have iPhones and microprocessors back in the olden days, Social Security really wasn't set up by a bunch of simps. They actually noticed that medicine was improving, that it was a trend to be factored into long-term assumptions about the viability of the program and taken into account when figuring worker-to-beneficiary ratios.
Go forth and lay this week's zombie lie to rest. The worker-to-beneficiary ratio is not crashing the system.
(Altman will be speaking on a panel at Netroots Nation focusing on Social Security.)
