The Forgotten Five

Important Economic Facts Missing in the News

Missing Economic Fact #4: Social Security, as Currently Structured, Will Bankrupt Future Generations

During this past year's budget negotiations, Congress and the White House focused on achieving a balanced budget by the year 2002. Such a focus allowed them to not touch politically sensitive entitlement programs whose costs are set to explode shortly after 2002. Since they are politicians, this is understandable. What's not understandable is that reporters, for the most part, let them get away with it. The overwhelming majority of budget stories this year have simply ignored the catastrophic futures of Social Security and Medicare.

Instead, they promoted the budget deal using the same language as politicians. For example, Paula Zahn, on the May 3 CBS Evening News cheerfully announced that "the forecast looks good for the breakthrough budget deal to balance the budget by the year 2002." Two days earlier, Dan Rather had called the deal "a possible legislative landmark." Two ABC reporters, John Cochran and Kevin Newman, said the agreement between the two parties was "historic," with Newman saying that "it looks like plenty of bipartisan good will in Washington." And NBC's Tom Brokaw heralded the "breakthrough deal" as the "best demonstration of bipartisan spirit since the Gulf War in the capital."

But none of these reporters were skeptical enough of both parties' glorious claims to point out that the Social Security Administration admits Social Security will begin running deficits by about 2011. As Stephen Moore of the Cato Institute argues, even "that may be an overly optimistic assessment. In four of the last six reports of the [Social Security Administration's] trustees, the number crunchers have had to fast-forward the date when Social Security starts losing money." According to Moore, "Social Security has an unfunded long-term liability of roughly $5.5 trillion -- which is larger than the entire national debt." He also points out that in "1950 there were 17 workers for every retired person. Today there are three. By 2030 there will be just two." This means that to "keep the system solvent at the current benefit levels (along with Medicare) would require the [payroll] tax rate to rise from 15 percent to as much as 30 percent."8 Either that or it's back to enormous deficits.

This is a serious news story, but instead of reporting it most reporters were busy calling an agreement which left entitlements unreformed "a breakthrough budget deal" and "a legislative landmark" and "an historic agreement."

Sources For Journalists
Whom To Call For More Details On This Missing Fact

Naomi Lopez Institute for Socioeconomic Studies (914) 428-7400
Stephen Moore or Michael Tanner Cato Institute (202) 842-0200
Liz Tobias Citizens for a Sound Economy (202) 783-3870