Economists: Stop Talking About The Non-Existent Social Security Crisis

baker.jpgToday, Campaign for America’s Future organized a call with some prominent economists — including Nancy Altman, former top assistant to Alan Greenspan on the 1983 Social Security Commission and Dean Baker, co- director of the Center for Economic and Policy Research — to discuss the White House’s “fiscal responsibility summit,” which is to be held next week. The point of the summit is “to consider just how the government can get a grip on its increasingly ugly balance sheet.”

While the White House has “put out the word that the summit will not be the occasion to announce a task force on keeping Social Security solvent for the long-term,” there are concerns that it will be a perfect opportunity for Obama “to compromise with deficit hawks” on entitlement reform.

Just in case, Baker and Altman both took the opportunity to set the record straight on the Social Security crisis — or lack thereof:

BAKER: Social Security is not facing a crisis, or anything that any reasonable person could call a crisis…It’s a very distant problem.

ALTMAN: The “entitlement crisis” frame is entirely misleading.

Indeed, there is very little crisis-like about the Social Security situation, and talking about it with such language grossly overemphasizes the problem. The Congressional Budget Office “projects that the program can pay all scheduled benefits for the next 40 years with no changes whatsoever.” That’s not to say that smart reforms shouldn’t be made if someone comes up with them, but it’s not as if there’s a fire that needs to be put out right now.

It should be reassuring, then, that there is very little evidence from the administration that slashing Social Security is anywhere on the radar. In fact, in Politico today, Office of Management and Budget director Peter Orszag explained where the real fiscal crisis is:

“Social Security faces an actuarial deficit over the next 75-100 years. In the past, I’ve resisted the term ‘crisis’ to describe that kind of situation,” he said. “This is not quantitatively as important as getting health care done.”

Indeed, long-term fiscal stability is impossible without addressing health care costs. As Ezra Klein noted, “The simple fact is that the administration is not focused on Social Security…The Obama administration believes that the entitlement problem is a health care entitlement problem, and the health care entitlement problem is a health care system problem.”