Truth and Fiction in Sen. Corzine's Radio Address on Social Security

May 6, 2002

Sen. Jon Corzine (D-NJ) gave last week's Democratic response to the President's weekly radio address. Corzine spoke on Social Security, an issue he has become increasingly active on. In particular, Corzine warned against plans to reform Social Security using personal retirement accounts, saying they would cut benefits and add insecurity.

However, several of Sen. Corzine's statement's demand correction, for they mischaracterize the Social Security debate and proposals that have been put forward to address the program's long-term fiscal problems.

Statement: "In recent months, President Bush and Congressional Republicans have again pushed for raids on Social Security to finance tax breaks for large corporations including, incredibly, a $250 million tax break for Enron. As you might imagine, these raids will jeopardize the long-term financial security of hardworking American families."

Fact: Social Security is funded by payroll taxes, while last year's tax cut passed by Congress applied only to income taxes, which are not used to fund the system. The balance of the Social Security trust fund both today and in the future will not be affected by the recent tax cuts. If Corzine is arguing that what matters is not the bookkeeping balance of the trust fund but how Social Security's actual cash surpluses are used, then he must admit that the program's entire trust fund financing structure is a charade: in almost every year since 1985, Congress has spent every penny of Social Security surpluses. Personal accounts would have prevented those "raids," but Corzine is opposed to them.

Statement: "The Republicans also want to privatize Social Security, taking trillions of dollars from the trust fund to finance private accounts…"

Fact: Social Security's non-partisan actuaries write, "If the personal accounts are considered as a part of 'Social Security,' it is reasonable to combine the amounts of Trust Fund assets and personal accounts for a representation of total system assets." By this measure, not only do personal account proposals from the president's bipartisan reform commission not drain money from Social Security, they make it stronger than ever. By 2075, the current system will hold a debt worth $3.2 trillion in today's present value dollars. Under the commission's Plan 1, that debt is reduced to $1.9 trillion, and under Plans 2 and 3 it turns to assets of $2.4 trillion. In other words, Social Security's own actuaries attest that rather than draining money from Social Security, personal account plans build the system's assets.

Statement: "President Bush's own Social Security commission has developed privatization plans that would require drastic reductions in future Social Security benefits. For some seniors, these cuts could exceed 25 percent. In the future, seniors could face far deeper cuts in benefits, up to 45 percent."

Fact: Here are the real facts: proposals from the president's reform commission would make no changes whatsoever for anyone aged 55 and over. Current and near-retirees will not see their benefits cut, despite what some opponents may charge. Moreover, the commission plans raise benefits versus what the insolvent current program will actually be able to pay. For instance, in 2042, a low-wage retiree with a personal account would receive $986 from Plan 2 versus $896 promised by the current system and just $655 that it can actually pay. If Sen. Corzine wishes to pay even higher benefits, he should put forward a specific proposal to do so, one that can be scored by Social Security's actuaries to determine its true benefit levels and impact on the overall budget.

Statement: "Seniors can't afford these cuts. After all, the average Social Security benefit is less $10,000 a year. That's already inadequate. President Bush's commission may believe that $10,000 a year for seniors is too much. We disagree."

Fact: As noted above, charges of "cuts" are simply false. Moreover, real benefits would rise under the president's commission's proposals. For instance, an average-wage worker retiring in 2002 receives $13,526 annually from the current program. Under the commission's Plan 2, average new retirees would receive $14,328 (in today's dollars) in 2012; $14,268 in 2022; $14,772 in 2032; and $16,704 in 2042. Benefit increases would be higher for low-wage retirees, and new anti-poverty protections are put in place for minimum wage workers and lower-income widows.

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