Eric Laursen is the author of The People's Pension: The Struggle to Defend Social Security Since Reagan, a comprehensive look at the political battles over the future of Social Security over the last 30 years. Laursen will appear on two panels, "Should Wall Street Control Social Security" (10 a.m. Saturday, March 9, in the Integrated Learning Center, room 120) and "Future of Liberalism in the Age of Obama" (2:30 p.m. Sunday, March 11, in the Integrated Learning Center, room 120). He'll also discuss his book with Tucson Weekly senior writer Jim Nintzel at 11 a.m. Sunday, March 10, in the Gallagher Theater. Here's a condensed Q&A with Laursen.
How vital is Social Security to the economic security of America's elderly and disabled?
Well, it's more and more so. Twenty million Americans every year are kept out of poverty by Social Security. And something like 45 percent of retired Americans today would be under the poverty line if it weren't for Social Security benefits they receive. Social Security is not a hugely generous system.
The average benefit is maybe $1,200 a month. The most anybody gets is around $2,000. So it's not making anybody rich, but it's vital to keeping a lot of people out of poverty. And the kinds of things that are being talked about as ways to make Social Security more solvent over time—means-testing it, changing the CPI to a less-generous formula, raising the retirement age—these are spoken of technical corrections or modest cuts, but the truth is there's no such thing as a modest cut for Social Security anymore. Even what looks like a fairly minor cut would drive a lot of people under the federal poverty line.
How stable is the Social Security program at this point?
To sort of summarize, the Social Security trustees say there is enough money coming in through the payroll tax and the Social Security Trust Fund to last us until 2033. At that point, the trust fund would run out and payroll taxes would be able to pay something like 75 percent of benefits.
All of that is relative, though, and the first point that needs to be made is that that's the intermediate projection that the Social Security Administration makes every year. They also make a best-case projection, which has actually been more accurate over the past couple of decades than the intermediate projections. And the best-case projections say that Social Security has enough money coming in through the trust fund to keep it solvent for the next 75 years. It's all relative. Social Security today is a lot more stable than 401(k) plans are. It's lot more stable than home equity.
Republicans have been pushing the idea of allowing Americans to invest at least a portion of their Social Security taxes in the stock market. Is that viable idea?
People who are already able to save will be able to put more money into more aggressive investment strategies. The problem is that lower-income workers are not going to see much of a return from it. They're not going to be able to put enough aside to really make a difference, so you're going to have a lot of benefit going to people who don't really need it and not very much benefit going to people who do need it.
People who push the idea of private accounts are usually the ones who warn the most dramatically about Social Security going broke, yet they seem so willing to undermine the system even further by creating these private accounts.