Economy

Memo To Rick Perry: Social Security Is Not Facing ‘Dire Financial Challenges’

2012 GOP hopeful Texas Gov. Rick Perry today penned a USA Today op-ed on Social Security, clearly trying to lay to rest some of the controversy surrounding his deriding the program as a “monstrous lie” and a “Ponzi scheme” ahead of tonight’s Republican primary debate. Tellingly, nowhere in the op-ed do those words appear, nor does Perry revive his argument that Social Security is “by far the best example” of a program “violently tossing aside any respect for our founding principles.”

But despite calling for a “frank, honest national conversation” about Social Security, Perry misleadingly says that the program has “dire financial challenges” that require big changes (which Perry didn’t deign to explain):

The first step to fixing a problem is honestly admitting there is a problem. America’s goal must be to fix Social Security by making it more financially sound and sustainable for the long term. But Americans deserve a frank and honest discussion of the dire financial challenges facing the nearly 80-year-old program…For too long, politicians have been afraid to speak honestly about Social Security. We must have the guts to talk about its financial condition if we are to fix Social Security and make it financially viable for generations to come.

Perry is simply incorrect to say that Social Security’s financial situation is “dire.” After all, if nothing is done to Social Security, it will still pay full benefits until the year 2037. After that, the program is projected to pay out 75 percent of benefits until 2084, which is close to full benefits once inflation is accounted for. As Senate Majority Leader Harry Reid (D-NV) has said, “Social Security has not added a single penny, not a dime, a nickel, a dollar to the budget problems we have. Never has. And for the next 30 years, it won’t do that.”

One simple step — lifting the payroll tax cap so that more wages for the wealthy are subject to the payroll tax — guarantees Social Security’s solvency for 75 years. As Mother Jones’ Kevin Drum put it, “this is really the only thing you need to know about Social Security — the program costs about 4.5% of GDP today and will eventually top out at about 6% of GDP in 2030 and beyond. You can bring that into balance forever with tiny tweaks phased in over the next two decades. Not only is it not a Ponzi scheme, it’s not even a major problem.”

Though Perry lays out literally no solutions in his op-ed, he has previously proposed an economically impossible state takeover of Social Security, that, if implemented, would simply cause the program to collapse. Read the Center for American Progress’ plan for Social Security here.