In a townhall meeting on Social Security in Beverly Shores this week, Rep. Chris Chocola (R) of Indiana got a question many members have been getting this week. A constituent asked why we can’t raise or eliminate the payroll tax cap as a way to strengthen the Social Security system and ensure its long-term solvency. Chocola responded, according to the local paper, that “that would buy about seven years but he is looking for long-term solutions.”
Well, that’s just not true. Or, if you want to say it’s true because it’s vague, it is nonetheless highly misleading.
Let me explain.
Earlier today we noted a new actuarial memo put out by the Social Security administration. The memo looks at 18 potential ‘fixes’ and examines how long each would extend the solvency of the program. For our purposes, we’ll focus on #14, which looks at how the outlook would change if the payroll tax cap were eliminated (ed.note: The table in question can be found on page 18 of the linked pdf document.)
What does it say?
It says that whereas the Trust Fund is scheduled to be exhausted in 2042 under current law, this change would keep the system solvent through 2079 (ed.note: under SSA scoring procedures they don’t go past 75 years, thus the date 2079).
In 2079, the Trust Fund would be shrinking. But measured as a percentage of the annual budget of Social Security it would be slightly larger than it is now. Now, I don’t know about you but that sounds like it extends solvency considerably past 37 years, not 7 years.
Another way of putting this is to say that simply making this one change, getting rid of the cap, would extend the solvency of Social Security well beyond the lifetimes of almost anyone living today.
So what the hell is Chocola talking about?
Chocola is talking about the year that you have to start drawing money out of the Trust Fund, i.e., the 2018 date folks are always talking about.
Now, you might figure that the two numbers should be about the same — put off dipping into the Trust Fund for seven years and you put off when it runs out of money by about seven years. But the Social Security actuaries’ estimates show clearly that that is not true.
Now, two points. First, there are a lot of complexities and ins-and-outs behind those magic dates of 2018 and 2042. But as long as those are our benchmarks, removing the cap makes a very big deal. And Chocola isn’t levelling with his constituents. Second, it’s not just Chocola — he’s got his own unique portfolio of shenanigans we’ll be discussing later. But this ‘seven years’ line is being used by virtually every Republican holding townhalls this week. And they are seldom being called on it. In fact, I bet will hear it several times on the Sunday shows. And I wonder if anyone will contradict it.
Late Update: I now see that Duncan Black (aka Atrios) has already been addressing this point — particularly reporters’ failure to call people on it — in two excellent pieces (one and two) at Media Matters.