Social Security among money topics at book fest

2013-03-03T00:00:00Z Social Security among money topics at book festArizona Daily Star Arizona Daily Star Arizona Daily Star
March 03, 2013 12:00 am  • 

The Tucson Festival of Books at the University of Arizona next weekend will feature several au1thors of business books.

Among them:

• William Cohan will discuss his book, "Money & Power: How Goldman Sachs Came to Rule the World," at 1 p.m. Saturday in Koffler Room 204.

• Chip Heath, a professor at Stanford Graduate School of Business, will discuss how to make better choices in life and work, at 11:30 a.m. Sunday in Modern Languages Room 350

• Eric Laursen, who has been reporting and writing about America's coming retirement crisis for nearly two decades, will speak about "The People's Pension: The Struggle to Defend Social Security Since Reagan" at 11:30 a.m. Sunday in the Gallagher Theater. He also will appear with Cohan in "Should Wall Street Control Social Security?" at 10 a.m. Saturday in Integra-ted Learning Center Room 120.

The Star posed three questions to Laursen in anticipation of his visit to Tucson next week.

What do you make of the government's projections about the solvency of the Social Security program?

What a lot of people don't know is that the SSA actually computes three sets of projections every year: best-case, intermediate, and worst-case. Under the best-case projections, Social Security's books will stay balanced - meaning that there will be enough money coming in from payroll taxes and interest on its trust fund assets to pay benefits - for 75 years and beyond. That's as far as anyone can plausibly claim to see.

The intermediate projections say Social Security will have enough to pay full benefits until 2033 - 20 years from now. After that, Congress will need to either cut benefits or raise payroll taxes or some combination.

The worst-case projections, of course, say it'll happen even sooner. But the only projections that the media tend to pay attention to are the intermediate numbers - which have actually been less accurate than the best-case numbers in recent years.

But what people need to know is that, first, these are just projections, and they can change rapidly, depending on the state of the economy. In the late '90s, Social Security quickly gained 10 years of solvency because we actually had real wage growth for the first time in decades.

So if you're concerned about those Social Security projections, you should worry first about whether working people are getting a leg up in the economy, because it's their payroll taxes that keep the system going. If people aren't enjoying rising wages, payroll tax receipts suffer.

What do think would be the smartest way to keep Society Security solvent into the future?

There are several things we can do. And none of them involve cutting benefits, which I believe are too low and should be raised if we're not to have a huge problem with poverty among the elderly in coming years.

We can raise the cap on the amount of earnings that are subject to payroll tax. Right now, it's $113,700, which means too much of affluent Americans' income isn't taxed for Social Security purposes. Which means too much of the burden falls on lower-income people.

Raising the cap would eliminate a lot of the shortfall. We could actually wipe out the whole thing by modesty raising payroll taxes across the board, for everyone. This could be done very gradually, over the next couple of decades, so that nobody's purchasing power was affected. Recent polls show that this has strong public support - Democrats, Republicans, even tea partiers.

But the best approach of all, I believe, is for Washington to leave Social Security alone and concentrate on how we can start creating good jobs with rising wages again for American workers. Because stagnant wages - which we've had for most of the past 40 years - means stagnant payroll tax receipts. Which means less money to cover Social Security benefits.

Solve this problem, and you've solved a great deal of Social Security's problem - and a lot of others besides.

Social Security and Medicare were touchstones of the 2012 presidential election. How was the national conversation advanced by the discussions?

It's incredibly ironic, and a great example of how fearfully out of touch Washington has become with the rest of America. In the election, the voters emphatically agreed with President Obama that affluent people should pay more to cover the costs of vital government services. They also agreed overwhelmingly that Social Security and Medicare shouldn't be cut.

Yet, the conversation in Washington since the election has almost entirely been about cutting discretionary spending, including programs that affect the most vulnerable Americans. Obama and the Democrats are backtracking on their revenue demands, playing into the hands of the very Republicans they defeated.

There's a desperate need for working people to get out in the street and get in touch with their lawmakers and send them a clear message - right now - that this is unacceptable.

If you go

Tucson Festival of Books

• When: March 9 and 10

• Where: University of Arizona

• Admission: Free

(See the special section in today's paper for a full listing of authors, presentations and venues.)

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