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As reporters cover the just-released 2017 Social Security and Medicare Trustees Reports, Social Security Works provides you with this fact sheet that summarizes and puts in context the Social Security report's key findings. This fact sheet updates the figures in the media backgrounder Social Security Works issued in advance of the Trustees Report's release. Please note that this fact sheet addresses only the Social Security's cash benefits Trustees Report (Old Age, Survivors, and Disability Insurance Trustees Report), and not deal with the Medicare Trustees Report.
In addition to reviewing this fact sheet, we invite you to speak with our president, Nancy Altman, who is a nationally recognized Social Security expert (see bio below). We also urge you to review our fact sheet that discusses, among other things, misinterpretations by non-experts caused by over- emphasis of unrealistically long valuation periods. You may also want to read Columbia Journalism Review's "Report Card on Social Security Coverage," written in response to coverage of the 2012 Trustees Report.
The most important takeaways from the 2017 Trustees Report are that (1) Social Security has a large and growing surplus, and (2) Social Security is extremely affordable. At its most expensive, in 2095, Social Security is projected to cost just 6.17 percent of gross domestic product ("GDP"). That is considerably lower, as a percentage of GDP, than Germany, Austria, France, and most other industrialized countries spend on their counterpart programs today! In 2016, Social Security constituted just 5 percent of GDP.
The report shows that Social Security is fully and easily affordable. The question of whether to expand or cut Social Security's modest benefits is a question of values and choice, not affordability. Indeed, in light of Social Security's near universality, efficiency, fairness in its benefit distribution, portability from job to job, and security, the obvious solution to the nation's looming retirement income crisis, discussed below, is to increase Social Security's modest benefits. The average annual benefit received by Social Security's over 61 million beneficiaries is less than $15,000 this year.
Moreover, expanding Social Security not only addresses the retirement income crisis, it also is part of the answer to growing income and wealth inequality and the financial squeeze on working families. Expanding, not cutting, Social Security while requiring the wealthiest among us to contribute more - indeed, their fair share - is the best policy approach to addressing these challenges while restoring Social Security to long-range actuarial balance. Cutting those modest benefits will only exacerbate these challenges.
That is perhaps why the Democratic Party strongly favors expanding, not cutting Social Security. The 2016 Democratic Platform states:
We will fight every effort to cut, privatize, or weaken Social Security, including attempts to raise the retirement age, diminish benefits by cutting cost-of-living adjustments, or reducing earned benefits. Democrats will expand Social Security
Consistent with that pledge, nearly 20 Social Security expansion bills have been introduced in the House and Senate just since 2015. Recently, the Social Security 2100 Act, introduced by Rep. John Larson (D-CT01), has 158 cosponsors in the House of Representatives--the largest number of supporters for any expansion bill ever
The report projects that Social Security's cumulative surplus will be $2.9 trillion in 2017, growing to about $3 trillion around 2021. It reports that Social Security is fully funded for the next decade, 93 percent funded for the next 25 years, 87 percent funded over the next 50 years, and 84 percent funded over the next 75 years. Without a single penny of additional revenue, Social Security will have sufficient income and assets to pay all benefits to America's seniors, people with disabilities, and survivors of deceased workers, as well as all associated administrative costs, for around one and a half decades, until 2034, and 77 percent of all benefits and associated administrative costs thereafter. Moreover, the report shows that, with modest legislated increases in revenue, Social Security will be able to pay all scheduled benefits for the foreseeable future.
More specifically, journalists may want to give special attention to the following:
Income to Social Security from all sources exceeds all expenditures in 2017, which is why the program's reserves will continue to grow(see Figure 2 on p. 2). As Figure 1 (see p. 2) shows, Social Security has three revenue sources: 1) wage contributions from employees, matched by employers; 2) investment earnings on Social Security's U.S. Treasury bond holdings (which have the same legal standing and status as other interest-bearing Treasury bonds issued by the government); and 3) dedicated income taxes on the Social Security benefits of those with higher incomes.
It is sometimes reported that Social Security is paying out more money in benefits than it is collecting in income, but that is wrong. This claim counts only Social Security's income from payroll contributions, disregarding one or both of its other two dedicated sources of income: investment income and dedicated income tax revenue, as stated above. While viewing Social Security's finances in this fashion, i.e. ignoring one or two of its three sources of revenue, portrays it in "cash deficit," this view (and term) has no legal meaning with regard to Social Security's finances, and no bearing on its ability to pay benefits. Indeed, so-called "cash deficits" have happened 29 times since 1957, without ever affecting the system's ability to pay benefits. Moreover, as Figure 2 shows, when income from all of Social Security's statutory revenue sources is counted its 2017 revenue is projected to surpass its outlays.
The nation is facing a looming retirement income crisis where most workers will be unable to cease work without a drastic reduction in their standards of living. Over half (52 percent) of American households headed by someone of working age will not be able to maintain their standard of living in old age, and this figure rises to roughly two-thirds when health and long-term care costs are also considered. Traditional employer-sponsored defined benefit pension plans are disappearing, leaving workers with, at best, defined contribution retirement savings plans, which have proven inadequate. Around half of households aged 55 or older had zero retirement savings in 2013. Among those households age 55-64 with some retirement savings in 2013, the median amount of those savings was about $104,000, equivalent to an annuity of just $310 a month. Thus, it is not surprising that today two-thirds of senior beneficiaries rely on Social Security for a majority of their income. Social Security will certainly be even more important to tomorrow's seniors.
As important as restoring Social Security to long-range actuarial balance is, it is imperative to remember that it is simply a means to the end of providing America's families with basic economic security. Recognizing that Social Security is a solution to our looming retirement crisis and other challenges facing the nation, serious analysts, and a growing number of policymakers and nonprofit organizations haveadvanced responsible, fully-funded proposals to expand Social Security.
Social Security Works' mission is to: Protect and improve the economic security of disadvantaged and at-risk populations; Safeguard the economic security of those dependent, now or in the future, on Social Security; and Maintain Social Security as a vehicle of social justice.
"Essentially, whatever they call climate finance is climate finance," said one developing nation's lead climate negotiator.
Wealthy nations are spending money under the guise of "climate finance" to fund projects that have little or nothing to do with tackling the climate crisis and—as in the case of three Japanese-backed coal plants—are sometimes fueling the planetary emergency, according to a Reutersinvestigation published Thursday.
While media outlets including Reuters have recently reported that rich countries are on track—albeit long overdue—to finally meet their 2009 pledge to invest $100 billion annually in climate financing by 2020, the new Reuters investigation shows that governments are funding climate-harming projects and counting the expenditures toward their giving total.
"This is the wild, wild West of finance," Mark Joven, an undersecretary in the Philippines Department of Finance and the country's lead climate negotiator, told Reuters. "Essentially, whatever they call climate finance is climate finance."
\u201cWealthy countries have pledged $100 billion a year to help end the #climatecrisis. \n\nBut it turns out that large sums have ended up in strange projects - including a coal plant, a hotel and chocolate shops \ud83e\udd2f https://t.co/LkDtXRCNsz\u201d— Greenpeace International (@Greenpeace International) 1685718012
The Japanese government has lent at least $9 billion for projects that are dependent upon fossil fuels. These include a 1,200-megawatt coal-fired power plant in Matarbari, Bangladesh, coal plants in Vietnam and Indonesia, and a new terminal at Egypt's Borg al-Arab Airport. The Matarbari plant is expected to add 6.8 million tons of carbon dioxide to the Earth's atmosphere every year, while the airport terminal is forecast to increase outbound flight emissions by about 50% over 2013 levels.
Japanese officials have attempted to justify the investments by portraying the coal plant as an improvement because it uses Japanese technology that generates more energy with less coal, while calling the new terminal an "Eco-Airport" replete with energy-saving solar panels, high-efficiency air conditioning, and LED light bulbs.
However, Wayne King, director of climate change for the Cook Islands—a self-governing South Pacific nation in free association with New Zealand—took exception with Japan's characterization.
"Basically, that's a development project," King said of the Egyptian airport project. "You can't count it, because the motivation is wrong."
\u201cThis is utterly absurd! \n\u201cWealthy countries have pledged $100 billion a year to help reduce the effects of global warming. But Reuters found large sums going to projects including a coal plant, a hotel and chocolate shops\u201d\n#ClimateJustice #LossAndDamage\nhttps://t.co/Mnb2mzZG2C\u201d— Prof. Farhana Sultana (@Prof. Farhana Sultana) 1685675967
Other examples of questionable climate financing in the Reuters report include an agreement by the United States to loan $19.5 million to the developers of a Marriot hotel in Cap-Haïtien, Haiti; a Belgian backing of an Argentinian film about a man who works to destroy forests for a paper company before falling in love with an environmental activist; and a $4.7 million Italian investment in a chain of chocolate and gelato shops across Asia.
According to the report:
Some countries count projects that never happened toward climate finance goals. France reported a $118.1 million loan to a Chinese bank for environmental initiatives, as well as loans totaling $267.5 million for upgrades to a metro system in Mexico and $107.6 million for port improvements in Kenya. Each project was subsequently canceled with no funds paid out, according to the French Development Agency. Similarly, the U.S. reported $7 million in insurance coverage for a hydropower project in South Africa that never happened.
Iqbal Kabir, an official in the Bangladeshi Ministry of Health and Family Welfare, told Reuters that "people deserve more" than the misallocation of climate funds for projects like coal plants, while criticizing countries that are "spending [climate funds] on other projects, depriving the issues like women's health, children's health, and salinity intrusion."
Matthew Samuda, a minister in Jamaica's Ministry of Economic Growth and Job Creation, added that "if we are telling ourselves we are spending money and investing in our future in a way that we are not, then we are courting disaster."
"For too long, EPA has allowed pesticide-coated seeds to jeopardize threatened and endangered species across the country," said one advocate.
Two public health groups filed a lawsuit against the U.S. Environmental Protection Agency on Thursday, demanding that the agency close a regulatory loophole that has allowed insecticide-coated seeds to proliferate across 150 million acres of cropland in the United States.
The Center for Food Safety (CFS) and the Pesticide Action Network North America (PANNA)are co-plaintiffs in the lawsuit filed in the U.S. District Court in the Northern District of California, which pertains to seeds coated in neonicotinoids, often called neonics.
The EPA has long failed to regulate neonics, denying a rulemaking petition filed by CFS in 2017 which asked them to close the loophole which allows neonic-coated seeds to be used to grow corn, soy, and other crops across the country.
The agency only regulates pesticides that are directly sprayed on crops, allowing companies to continue using the coatings.
The EPA ignored CFS's petition until 2021, when the group sued to force a response, only to have the petition denied. PANNA joined CFS in the new lawsuit on Thursday, arguing that the denial was unlawful.
"Despite knowing the ongoing grave harms caused by coated seeds, EPA has still unlawfully refused to close the loophole allowing them to escape any regulation," said Amy van Saun, senior attorney at Center for Food Safety. "That decision is as unlawful as it is irresponsible. EPA is supposed to protect these species and habitats, not enable their peril, and we are asking the court to tell the agency to do its job."
Toxic neonicotinoids can cause paralysis and death in crucial pollinators including bees and butterflies.
"Ingesting one of these seeds can cause serious harm or death to a songbird," said CFS on social media.
\u201cWe join @pesticideaction to sue the @EPA for failing to close a loophole that has allowed insecticide-coated seeds to proliferate across 150 million acres of US crop land (unregulated) causing widespread harm to essential pollinators like birds and bees, beneficial insects, and\u2026\u201d— Center for Food Safety (@Center for Food Safety) 1685670031
"For too long, EPA has allowed pesticide-coated seeds to jeopardize threatened and endangered species across the country," said Margaret Reeves, senior scientist at PANNA. "EPA must close the regulatory loophole for toxic pesticide-coated seeds to prevent further harm to wildlife, ecosystems, and people."
The head of the major U.S. military contractor said the Pentagon top-line in the debt ceiling deal is "as good an outcome as our industry or our company could ask for at this point."
The head of the top weapons contractor in the United States said Thursday that he's happy with the debt ceiling agreement negotiated by the congressional Republicans and the Biden White House, a deal that proposes a military budget increase while imposing two years of caps on other discretionary federal spending—impacting funding for education, housing, and more.
James Taiclet, the CEO of Lockheed Martin, said at a conference that the bill now awaiting President Joe Biden's signature is "as good an outcome as our industry or our company could ask for at this point," noting that it calls for "3% growth for two years in defense where other areas of the budget are being reduced."
"I think we're in a real strong position at this point," said Taiclet, adding that "there's sufficient funding in the president's budget."
Biden's $886 billion military spending request for fiscal year 2024—a $28 billion increase over current levels—is the topline military budget number set by the debt ceiling legislation, though war hawks in both parties are already exploring ways to dump even more money into the Pentagon's overflowing coffers.
If finalized in the appropriations process, military outlays will account for close to 56% of the U.S. federal government's total discretionary spending in fiscal year 2024, Lindsay Koshgarian of the National Priorities Project noted Thursday.
"This represents a massive shift of resources away from domestic programs and toward the military: the already-gargantuan military budget will increase by $28 billion (3.3%), while domestic spending will take a cut of $63 billion (8.2%)," Koshgarian wrote. "Cuts to many domestic programs will need to go deeper, because domestic spending includes veterans' programs, which are protected from cuts in the current deal."
"The only reason there’s a budget deal at all right now is because House Republicans threatened to tank the economy by refusing to allow the U.S. to pay its bills unless they got cuts for programs they don't like," she added. "They succeeded, and as others have shown, the people to pay the price will be the poorest and most down on their luck. Worse, the current deal could set a new precedent for more of the same: unnecessary military increases while domestic programs are slashed."
Lockheed Martin, one of the contractors that has been price-gouging the Department of Defense for years, is poised to be one of the top beneficiaries of the larger Pentagon budget—much of which will likely wind up benefiting private companies.
As Responsible Statecraft's Eli Clifton reported Thursday, Lockheed "received 73 percent of its net sales from the U.S. government in 2022 and invested $13 million in lobbying the federal government."
"Their lobbyists heavily focus their efforts on the defense budget," Clifton added, citing OpenSecrets.
William Hartung, senior research fellow at Quincy Institute for Responsible Statecraft, said Friday that the newly passed debt limit deal "unnecessarily privileges the Pentagon over other essential programs."
"There's no reason to exclude the Pentagon from the budget freeze," he added. "Congress should push the current proposed military spending total of $886 billion back to FY2023 levels in the appropriations process that will play out over the course of this year."