The Mythical Social Security Crisis of 2011

That’s right. The sky is not falling. It’s not, as retiring rockers R.E.M. would put it, “the end of the world as we know it.” You might, of course, think otherwise if you’ve been watching the recent debates among Republicans who want to replace Barack Obama as president. Texas Gov. Rick Perry calls the system a Ponzi scheme. Rep. Ron Paul, another Texas Republican, says the program is “on its last legs.” And former Massachusetts Gov. Mitt Romney suggests that the system faces “looming bankruptcy.”

But here’s the reality: The social Security Trust Fund’s surplus will continue to grow for more than a decade, until 2022. After that, the surplus will, indeed, start shrinking as more and more baby boomers retire and start collecting checks rather than paying in. But it will take until 2035 or so before the surplus is gone.

Even then, the fund will be far from broke. According to the government’s own auditors, there will be enough cash to pay 75% of the program’s benefits for another half a century, until 2085.

So why all the “woe is us” warnings if the end isn’t near? Politics, of course. A flood of younger voters helped sweep Obama past Arizona Sen. John McCain in the 2008 presidential race. But they might not be so eager to vote the same way next year if they’re convinced by Perry and company that Social Security is falling apart and there’s no chance they’ll get anything back from the system after paying into it throughout their careers. And seniors can be rattled by the mere suggestion that their checks will bounce.

Every generation goes through this period of doubt. Way back in the early 1980s, shortly after I joined the workforce and pondered who FICA was and what he was doing with all the money he took from my weekly check, Social Security was deemed by some to be dying. It didn’t die, of course.Congress and President Reagan made some changes and the checks kept arriving in the mail.

In 1996 there was another round of dire warnings, leading Mother Jones magazine to proclaim: “By 1999, Social Security as we know it may no longer exist.” Again, Congress and the president — this time Bill Clinton — stepped up and made changes to bolster the program.

And, at some point, that will happen again. Congress and the president — Obama in a second term or a Republican who defeats him, or someone a little further down the road — will make more changes to keep the system healthy. No Congress will allow Social Security to reach the point where benefit checks will be 25% smaller. Because folks collecting Social Security aren’t just check recipients. They’re voters, and enraged voters don’t give incumbent lawmakers much hope for job security.

Put another way, there is zero chance of Congress doing nothing to the Social Security system over the next 50 years. Zero. In fact, since 1937, Congress has mandated more than 60 changes to the program, altering the payroll tax rate 20 times and boosting the maximum wage subjected to the tax more than 40 times.

Poverty has increased in India

The current debate over poverty, if Rs.32 a day is enough for a person, is misdirected and the government should answer why the numbers of poor in the country are on the rise, says National Advisory Council member N.C. Saxena.

“The government’s estimate for poverty in 1972-73 was benchmarked at Rs.1.50 per day. It translates into Rs.32 per day today. There is nothing new with this estimate,” said the retired bureaucrat, known for speaking his mind, even in front of prime ministers.

“The government should instead be concerned that poverty has increased in India. The number of people below poverty line has gone up from 32 crore (320 million) in 1947 to 40 crore (400 mn) now,” Saxena, whose council is chaired by Congress president Sonia Gandhi, told IANS.

He said there were serious anomalies in the public distribution system — under which the poor who hold what is called “below poverty line cards” are entitled to subsidised grain. “This needs to be addressed.”

His comments follow an uproar after the Planning Commission told the Supreme Court last week that a person spending over Rs.965 per month in urban India and Rs.781 in rural areas cannot be deemed as poor and should be denied access to welfare schemes.

Saxena — who has published many critical papers on poverty and tribal welfare — said 60 percent of the people with cards for getting state doles were actually above poverty line and 20 percent of the genuine poor in the country did not have such a card.

“Many tribals and people living on the margins were left out in the last poverty survey. They are not getting the benefit of the public distribution system and other such social security schemes. The government should look into this,” he said.

“Vietnam, Myanmar and Bhutan have reduced poverty. But we have failed to do so despite much effort,” he said, adding as much as Rs.80,000 crore ($17.5 billion) is spent every year on various welfare schemes in India.

According to Saxena, who has also been a member-secretary of the Planning Commission, if the 2002 Census for ascertaining people below poverty had a 60 percent margin of error, the current round could have up to 80 percent error, as it is linked to caste.

“People are likely to furnish incorrect answers if they know the survey will determine their poverty status,” said Saxena, who had suggested a methodology to ascertain poverty numbers, followed by a letter now to Rural Development Minister Jairam Ramesh.

India currently has at least three estimates of poverty.

Economist Arjun Sengupta said 70 percent Indians were living on less than Rs.20 a day, and Saxena’s own report pegged it at over 50 percent of the population. A third study, by economist Suresh Tendulkar, pegged poverty in India at 37.5 percent.

Correct estimates are important to ensure welfare schemes reach the needy alone.