Myth #2: Fixing Social Security and Medicare will require "tough choices".
Reality: Social Security and Medicare are not facing a financial crisis.
Reality: Social Security and Medicare are not facing a financial crisis.
A new poll by the Pew Research Center suggests that nearly 80% of Americans don't trust the federal government. Unfortunately, we appear all-too-willing to trust the government when it tells us that Social Security and Medicare are heading for bankruptcy. Indeed, the same poll shows that fewer than half of us now hold a favorable opinion of the Social Security Administration (down 13% from a decade ago). No wonder. The drumbeat over the so-called "crisis" facing Social Security and Medicare has reached a fever pitch.
The government's message is clear: Both programs face significant trouble ahead, due primarily to the aging of our population. In order to deal with the looming problems, we will have to make "tough choices." Not everyone can have the money they were promised.
If you've been around a while, you've heard this all before. Remember the Greenspan Commission? This is the group that President Reagan appointed to "fix" Social Security in the early 1980s, the last time the system was on the brink of "collapse." Thanks to the "reforms" that were enacted in 1983, Americans are working longer (they raised the retirement age) and paying more (they accelerated increases in the payroll tax rate). And now we're being told it was all for nothing -- the system is broken again?
The truth is, the system was never broken in the first place, because the government's ability to pay benefits does not in any way depend on the balance in the Social Security or Medicare Trust Funds. Benefit checks come directly from the Treasury, and, as Alan Greenspan has admitted, "[A] government cannot become insolvent with respect to obligations in its own currency."
And so the question is not whether the government needs to make "tough choices" in order to keep these vital programs afloat. The question is, will politicians make the toughest choice of all and tell the American people the truth: Social Security and Medicare face no financial crisis now or in the future.
~Stephanie Kelton, Associate Professor, University of Missouri-Kansas City, Missouri
