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Tuesday, April 24, 2012

Social Security Hurt by Republican Jobs Obstructionism

The Center for Economic and Policy Research (CEPR) published its commentary on Monday's release of the Social Security Trustees Report, which found that the Social Security trust fund would be exhausted in 2033. CEPR rightly blames the recession for the deterioration of Social Security's finances. As I argued last September with regard to falling health care coverage, the new results from the Trustees show the need for a jobs agenda.

In fact, in just four years, the estimated trust fund exhaustion date (intermediate assumption) has gotten eight years closer. It was 2041 in the 2008 report, 2037 in the 2009 report, 2037 in the 2010 report, and 2036 in the 2011 report. Jared Bernstein charts these trends going back to 1985:

Source: Trustees Reports. via Jared Bernstein.

The CEPR analysis highlights just how crucial jobs are to Social Security's solvency:
As workers have found themselves without jobs, Social Security has received fewer contributions. The 2007 Trustees' Report projected 169.0 million workers in 2011 earning $6.5 trillion in taxable earnings. Last year, there were only 157.7 million workers earning $5.5 trillion.
In other words, there was a $1 trillion shortfall of income in 2011 alone compared to the pre-recession baseline. If this doesn't highlight the need for much greater action on the jobs front, nothing does.

Yet what is the Republican response to this situation? At the federal level, there has been universal opposition to anything that might create more jobs as long as Obama is President. At the state and local level, as Paul Krugman points out, 70% of the decline in public sector jobs has come in Texas and in the states where Republicans took control of government in 2010.

What we see from the Trustees Report is that as jobs and income decline, Social Security is directly harmed. And I'm starting to have the feeling that for the Republicans, this is a feature, not a bug.


  1. Not to be direct about it, but if the max contribution to the SocSecTF were still at the 90th percentile of earnings, instead of the 85th (or possibly below now), there wouldn't be that flat-to-declining trend from 2003 ff.

  2. raising the minimum wage to $10/hr would go a long way towards maintaining SS revenues...