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Political Math: Social Security Cuts Don't Add Up

Judy Moses, 71, prepares to be arrested during an Occupy Chicago protest against cuts to federal safety net programs, including Social Security, Medicare and Medicaid, on Monday.
Scott Olson
Getty Images
Judy Moses, 71, prepares to be arrested during an Occupy Chicago protest against cuts to federal safety net programs, including Social Security, Medicare and Medicaid, on Monday.

Conservative activists in the Tea Party want Congress to cut government budget deficits. At the same time, liberal protesters in the Occupy Wall Street movement want lawmakers to reduce wealth inequality.

Both goals could be achieved by doing one thing: reducing Social Security payments to retirees, the wealthiest demographic group in the country.

While that solution might make mathematical sense, the political arithmetic says it doesn't add up. Few conservatives — and even fewer liberals — are calling for any reduction in Social Security benefits, set to rise by 3.6 percent in January.


This political unity comes even as: 1) Congress' bipartisan supercommittee is searching frantically for ways to reduce the government's annual $1.3 trillion deficit; and 2) new research shows that Americans over 65 are disproportionately wealthy.

"Social Security should not be used as a piggy bank to solve the nation's deficit," AARP's chief executive A. Barry Rand said in a statement on the New Deal-era program that provides monthly checks to retirees and their spouses.

'Protect The Program'

Polls show that by wide margins, Americans agree. A recent USA Today/Gallup poll showed 55 percent of Republicans say that when it comes to Social Security, "the most important thing is to protect the program." Democrats overwhelmingly agree.

One reason Social Security remains so popular is that, despite data showing the elderly have accumulated "wealth," millions of recipients struggle each month to come up with enough cash to buy groceries and keep the lights on.


In a recent report, the Census Bureau concluded that the number of people over 65 living in poverty "would be higher by almost 14 million if Social Security payments were excluded from money income, quintupling the number of elderly people in poverty." The poverty rate for Americans over age 65 would shoot to 45 percent, up from 9 percent.

In other words, many Americans would see a parent, aunt or uncle reduced to indigence after a lifetime of work if not for Social Security checks. Protecting those checks unites the left and the right.

"I think Social Security has worked pretty darned well," GOP presidential candidate Mitt Romney last month told several hundred senior citizens at The Villages, a suburban community north of Orlando, Fla. Social Security must be preserved, he said, adding that "Social Security is not going to change for anyone in this room."

An Unsustainable Path

Supporters of the program say the Social Security Trust Fund is sitting on $2.6 trillion in reserves — a sum great enough to cover all existing and new benefits for another quarter century. But experts say the program is on an unsustainable path, and will fail younger people by midcentury unless changes are made now.

The crux of the problem is this: The oldest of the 78 million babies born between 1946 and 1964 are turning 65 this year. This vast baby boom generation will cause a near doubling of the over-65 population over the next two decades. As the number of checks cut each month rises, the reserves will wither.

In the past year, Social Security passed a milestone — the point where the program began spending more in benefits than it took in through payroll taxes. Without changes, younger people now paying into the system won't be able to get full benefits by the time they retire.

Yet young people involved in the Occupy Wall Street movement are not demanding that Congress reduce payments to elderly Americans, either to shore up government reserves or to reduce wealth inequality. In fact, earlier this week, Occupy Chicago protesters joined with hundreds of senior citizens to demand that Congress keep Social Security benefits fully intact.

A Young-Old Wealth Gap

This hardy support for Social Security endures despite the worries about rising inequality. A new study, done by the Pew Research Center using Census Bureau data, shows the wealth gap between young people and retirees is growing dramatically.

The study found that in 2009, "households headed by adults ages 65 and older ... had 47 times as much net wealth as the typical household headed by someone" under 35 years of age. Pew says that "back in 1984, this had been a less lopsided 10-to-1 ratio." In other words, older people have long had more money than younger people, but the gap is radically widening now.

Pew said the median net worth of a household headed by someone 65 or older was $170,494 in 2009 — and that was 42 percent higher than in 1984, when the median net worth for that group was $120,457. In contrast, the median net worth of a household headed by someone younger than 35 was $3,662 in 2009 — down 68 percent from $11,521 in 1984.

The divergence largely reflects housing prices. Older people typically bought their homes years ago — long before the housing bubble of 2001-2007 drove prices so high. Younger households have seen their home values decline since the bubble burst.

Another problem for younger people is student debt. The Project on Student Debt says the average student loan debt for recent graduates is now at $25,250, up 5 percent from last year.

Broad Support For Social Security

Matthew Segal, the 26-year-old president of, a nonpartisan youth-issues activist network, said he would never support a plan to help young people pay off student loans by trimming current Social Security benefits.

This broad defense of Social Security is at the heart of the problem for the supercommittee, more formally known as Congress' Joint Select Committee on Deficit Reduction.

The 12-member panel was created this summer to draw up a plan by Nov. 23 to cut the deficit by at least $1.2 trillion over 10 years. The final package, if approved by a majority of the panel, must be voted on without amendment by the House and Senate by Dec. 23.

If the supercommittee fails to agree — or Congress votes down its plan — then an automatic, across-the-board round of cuts is supposed to kick in. But the automatic cuts would exclude Social Security.

In other words, Congress will be robo-cutting many programs that help young people, including the armed services, which employ large numbers of people in their late teens and 20s. Still, surveys show that when asked if they'd like to see an ax taken to Social Security, young people say "absolutely not," Segal said. "When you pay into the system, you deserve to get what you were promised."

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