If you only read the corporate media coverage, you might mistake the annual Social Security Trustees Report for good news. The ostensibly objective reporters at the New York Times celebrated that a “strong labor market steadied Social Security and Medicare Funds.” While CBS News boasted that “the federal retirement program said Monday it may not need to cut benefits until 2035, one year later than previously forecast, because of stronger performance by the U.S.”
“On the projected depletion date, 83% of benefits will be payable if Congress does not act sooner to prevent that shortfall,” reported CNBC, which again attributed the “slightly improved outlook” to a supposedly “strong economy.”
There’s just one problem: None of this is true.
Contrary to the intentional conflations by the media, the federal retirement portion of Social Security is still projected to go broke in 2033, as the trustees projected in last year’s report. Upon reaching insolvency in nine years, Social Security will only be able to pay out 79% of scheduled benefits, equivalent to the 21% across-the-board benefit cut fiscal hawks have forewarned for years now.
But the media and President Joe Biden‘s administration want to raid the Disability Insurance Trust Fund to stave off the impending bankruptcy of Social Security’s retirement program by another two years, something that is currently illegal.
Although it is called the Old-Age and Survivors Insurance program, Social Security’s retirement fund is not actually an insurance program but rather a generational wealth transfer. Furthermore, this wealth transfer is wildly regressive. Whereas various measures of the poverty rate for retirees are at or below 10%, with one Social Security study estimating it as low as 7%, the country’s overall poverty rate is about 12%. Because baby boomers stopped having children and started racking up multitrillion-dollar deficits on Uncle Sam’s charge card, the ratio of workers paying into Social Security to the program’s beneficiaries has plummeted from four in 1965 to three in 2009 and now 2.7 in 2024. Since 2021, Social Security has paid out more than it has received in payroll taxes, as the trustees project it will continue to do indefinitely.
Already, Social Security OASI steals from the comparatively poor to pay for the rich. Now the trustees have found that to stave off its own bankruptcy, OASI will steal from the abjectly poor and disabled, the DI Trust Fund, to pay to pad the coffers of the wealthiest generation in human history.
Unlike the OASI program, the DI Trust Fund is both an actual insurance program — a distribution of the risk that any of us could fall severely and debilitatingly disabled, as stringently defined by federal law — and a progressive program. Whereas Social Security retirement funds transfer money from disproportionately poorer populations to the wealthiest, the DI Trust Fund transfers payroll taxes to a more impoverished population. A 2012 study by the SSA found that compared to those 7% of retired workers who live in poverty, nearly a quarter of disabled workers do.
Under the law, the DI Trust Fund is entirely separate from the Ponzi scheme that is the retirement program, and unlike the OASI Trust Fund, the trustees are confident in the growing solvency of the DI Trust Fund throughout this century. It is, in fact, the singular portion of Social Security that is operating as social insurance should: a financially sound investment that distributes the risk of disabilities to help the unfortunate few who become disabled and cannot help themselves or their families. Unlike the rest of our entitlement schemes, it is never projected to go bankrupt. For those 9 million disabled people and their dependents who would otherwise be on the streets, the solvency of the DI Trust Fund is a success story.
And that is exactly why the trustees, who are all political appointees of Biden, want to raid it. The OASI program can remain solvent for two extra years by bankrupting an otherwise sustainable and successful program.
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“Social Security’s combined trust funds are projected to cover full payment of scheduled benefits on a timely basis until the trust fund reserves become depleted in 2035,” the trustees bury on Page 26 of their report. “Full payment of benefits until depletion of the hypothetical combined reserves in 2035 implicitly assumes that the law will have been changed to permit the transfer of funds between OASI and DI as needed.”
While raising the retirement age would not salvage Social Security entirely, average American life expectancy has risen 23% in the near century since the retirement age’s establishment. Raising the retirement age or slashing benefits for healthy adults with multiple decades left to work may seem politically dicey, but consider the Biden administration’s alternative: destroy a fiscally sound program for the nation’s least privileged to extend the boomers’ free ride for another two years.
