This article first appeared in the St. Louis Beacon, March 2, 2009 - Are you concerned that Social Security will go broke before you reach retirement age?
Michael Astrue, the commissioner of the Social Security Administration, certainly isn't.
Not only that, but Astrue -- who was appointed to the post by President George W. Bush -- believes the issue of insolvency will be addressed before the end of President Barack Obama's first term in office.
"We're not in as bad shape as people often believe," Astrue told area business leaders and members of Washington University's Eliot Society March 2 at a breakfast meeting sponsored by the Weidenbaum Center on the Economy, Government and Social Security.
Astrue said that his agency projects 2041 as the "magic year" that Social Security will reach insolvency, while the Congressional Budget Office puts it at 2047.
"Insolvency, particularly in this era, has the image of 'There's nothing left; you fall off the cliff -- it's AIG,'" Astrue said. "It's not that way with Social Security. If we did nothing and we hit insolvency in 2041 or 2047, pick your date, what that would mean is we would still be paying out 78 percent of benefits. That wouldn't be a great result, but we're not starting from zero. It's not so devastating as it sometimes feels to people."
Even so, Astrue said, studies indicate that many young American workers have little confidence that Social Security will be there when they reach retirement age.
So, is he telling 25-year-olds not to worry?
"It's a balance," he told the Beacon after his presentation. "There is a lot of area between happy-go-lucky and panic. And you want to be somewhere in between. It is right for someone that age to have concerns about it, and to be telling the politicians to shore it up for the longer run. But I think it's a mistake to just assume that money isn't going to be there and to write it off and then make other judgments based on that assumption."
Astrue believes the word 'insolvency' scares people.
"Probably, we should come up with a different term because it doesn't mean you get nothing the way you're going to get from a lot of these banking institutions. It means you're going to get less than what people get today. And that's significant. But it's not nothing, and it's a pretty good platform from which to try and move it back up and get people in the future to the level of today."
Astrue said the Obama administration has shown strong interest in tackling the issue of solvency, but he doesn't expect movement until the current debate over health care reform is resolved.
"Given that it is a heavily Democratic Congress, I think the likelihood that they will be able to pass something comprehensive in the next 12 to 18 months is high, and I do think that the appetite for getting on Social Security reform after that is high, and they will try to make sure that is done before the next presidential election," he said.
He said that instead of focusing on the political angst that normally surrounds discussions of Social Security, Obama has focused on what he calls a relatively small number of remedies that can be taken - doable, although painful.
In one of his more unusual observations, Astrue said that he sees evidence of Obama's commitment in his body language.
"He has a hand gesture that he makes when he talks about Social Security being a solvable issue," Astrue said.
He also pointed to funds in the economic stimulus bill that will allow Social Security to update its information database, including $750 million to replace its National Computer Center. In addition, the bill provides $500 million to reduce a backlog on processing disability claims under the Social Security and Supplemental Security Income program. About 12 million Americans receive federal disability payments through those programs.
Here are some additional comments from Astrue:
On the Obama Administration
"It is an extraordinary time. This is my 11th year working for the federal government, in some capacity, and there are certain things that seem to stay the same. Washingtonians do get cynical about calls for change, but what we have seen in the last couple of months has been change in an order and magnitude that I don't think we've seen in a long period of time. Some of that is exciting because the public has demanded it, and people are committed to doing it. Part of it is scary. There are huge amounts of money going out with very little consideration and thought for oversight, and things are being cobbled together after the fact. But, generally, there is an attitude of trying to get some things done in a new and different way.
"If you're hearing that it's different, that's not just rhetoric. It feels very different in how decision are getting made, what seems possible and what people seem to be lined up to do."
On Privatizing Individual Social Security Accounts
"I think that's been dead for a while. Certainly, when I came in [to office], it was effectively over, and the understanding between the executive branch and Congress was the agency would stay away from the debate. It hasn't been particularly problematic because the debate's been over. That was a serious debate for about five years, but I think at some point late in 2005, 2006 it was effectively over. The debate about solvency is going to be on very different vectors."
Is It Best to Draw Early but Reduced Benefits at Age 62?
"We say get the information and make your own choice, and it is complicated. We don't try to push. We do think that too many people have just not been getting information and are taking benefits automatically at 62 because of cultural expectations. But we think that people need to have the information. They need to run their numbers. Husband and wives need to have that conversation."
On Increasing the Age for Full Social Security Benefits
"My expectation is that when Congress talks about this they'll put everything on the table. I wouldn't expect to see any increase in the retirement age. I think they'll debate it - and might they do a small increase in retirement age? Possibly. But I wouldn't expect to see anything terribly different from the current levels being sort of slowly raised under the 1983 amendments.
"Might they as part of a package raise it by three months and take the savings associated with it? Yes, it's possible. The most likely scenario is to leave it right where it is, and they'll find other ways to get to where they need to be. There is concern about the fact that there are people in that age bracket who do want to keep working but are finding it difficult. And that's going to be part of what people are debating."
On the Impact of the Recession
"We have seen some increase with the downturn in the economy with retirement applications but not as much as you might think because for every person age 63 who didn't want to retire but has lost a job you have almost as many people who had planned retirement but looked at their 401k and said they can't afford to retire. So the numbers are up a little bit."
"Just this year, we'll have 3 million Americans applying for disability. There's a long list of studies that show that when unemployment goes up, more people apply for disability. It may be that this recession will be a little different. We're not far enough into it to know. The last time we had recessions this severe, we were a blue-collar economy and the recessions were more focused on blue-collar jobs. This is a much more white-collar recession. So, we're still not sure exactly what's going to be hitting us."
