"Current Law" Social Security Not What it Seems

April 24, 2001

In response to the Kenneth Apfel op-ed reported in last week's issue, former SSA commissioner Robert Ball wrote that we should keep the current Social Security system. But Ball's definition of the "current system" may lead some to believe it can do things it cannot:

"The argument really isn't about what is 'sustainable,' but about what is the best and most reliable approach for the long run: Social Security at the level provided by current law, or a lower level of Social Security benefits plus a mandatory savings plan subject to variables affecting the total income that a retiree could expect to receive. I vote for Social Security at its present level."

In opposing fundamental reform and saying that Social Security should simply pay full promised benefits under "current law," Ball and many others make a promise that Social Security will be unable to fulfill. In fact, true current law says that retirees will be paid not what Social Security's benefit formula promises them, but what the system can in fact afford.

In his recent book Reforming Social Security Charles Blahous calls referencing "current law" one of the "top ten tricks" in the Social Security reform debate: "Tables are forever being constructed in which reform plans are compared unfavorably, in terms of benefit levels or rates of return, to 'current law.' This is nonsense. 'Current law' can't pay those benefits. 'Current law' is even a misnomer. When the funding runs out, Social Security does not have the borrowing authority to continue to send check."

Hence, the true current law benefit for an average-wage 65-year-old worker retiring in 2039 will not be $17,281 per year, as the benefit formula entitles him to. It will be just $12,785, which is all the system can afford or is authorized under law to pay him. Promised benefits are simply unpayable under present financing, and current law recognizes that.

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