Media is advancing Bush administration's faulty argument on Social Security's race inequalities
Research ››› ››› ANDREW SEIFTER
Reporters and commentators have unquestioningly presented, or even promoted, the Bush administration's faulty argument for Social Security privatization that blacks are disadvantaged under the current system and that Bush's proposal for private accounts would address that purported inequity. But the General Accounting Office (GAO) and two Social Security Administration (SSA) actuaries have undermined that claim.
In covering President Bush's January 25 meeting with black leaders, several news reports repeated the administration's claim that the current Social Security program is unfair to blacks, but did not note any of the evidence debunking it. On January 25, Associated Press writer Nedra Pickler provided the administration's account while neglecting to report evidence refuting the claim that private accounts will especially benefit blacks; New York Times reporter Elisabeth Bumiller continued the trend January 26.
Los Angeles Times staff writers Peter Wallsten and Richard Simon, on the other hand, noted in a January 26 article some of the reasons private accounts could hurt blacks: "[Congressional Black] Caucus leaders contend that blacks rely disproportionately on disability and survivors benefits paid by Social Security, and that Bush's changes would jeopardize the entire system -- hurting black beneficiaries far more than the private accounts might help them."
In a January 25 report on FOX News' Special Report with Brit Hume, chief White House correspondent Carl Cameron reported the "administration selling point" that "because blacks on average do not live as long as whites, African Americans could get a fairer share of the retirement pie with the investment nest egg." On the January 24 edition of The Rush Limbaugh Show, nationally syndicated radio host Limbaugh declared: "If Social Security is all screwed up here because it discriminates on race and gender, it's broken! ... Can we all admit we need to fix it?"
But a GAO report and two SSA actuaries have documented the flaws inherent to this administration claim. On February 4, 1998, Social Security Administration deputy chief actuary Stephen C. Goss issued a memorandum (available on the Center on Budget and Policy Priorities website) responding to a January 1998 study from the conservative Heritage Foundation that asserted, "the low-income African-American male age 38 or younger ... is likely to pay more into the Social Security system than he can ever expect to receive in benefits after inflation and taxes." Goss noted: "In fact, results from more careful research reflecting actual work histories for workers by race indicate that the non-white population actually enjoys the same or better expected rates of return from Social Security than for the white population." In the September 1998 edition of The Actuary, former Social Security Administration chief actuary Robert J. Myers similarly refuted the Heritage study: "If the computations for young African-Americans had been made correctly, it is certain that a positive rate of return would have been shown. This is because of the weighted benefit formula (which provides higher relative benefits to low-earning workers), which more than offsets their lower longevity."
The GAO issued an April 2003 report titled "Social Security and Minorities" that also debunked the notion that Social Security discriminates against blacks. According to the report: "Differences by race in the relationship between taxes paid and benefits received under Social Security are due to differences in lifetime earnings, the incidence of disability, and mortality between the groups. In the aggregate, blacks and Hispanics have higher disability rates and lower lifetime earnings, and thus receive greater benefits relative to taxes than whites."
Although blacks do have a lower life expectancy than whites, as Media Matters for America noted when House Ways and Means chairman Bill Thomas (R-CA) made similar claims on the January 23 edition of NBC's Meet the Press, the discrepancy between the life expectancies of blacks and whites is largely due to higher mortality rates for black infants and youths. According to the report "Health, United States, 2004," compiled by the Centers for Disease Control and Prevention's National Center for Health Statistics, the difference in life expectancy for blacks and whites who survive until age 65 is about two years (depending on birth cohort). The administration's claims also ignore Social Security's survivor benefits, which are passed on to family members after a worker's death.
Further, contrary to Bush's suggestions, private accounts would not address the disparity in retirement benefits across race. As economists Dean Baker and Mark Weisbrot noted in a January 18 Center for Economic and Policy Research report, while "President Bush has often argued that Social Security is unfair to blacks because they have shorter life expectancies than whites, and therefore do not collect benefits for as many years on average ... the same logic applies to any annuity-type program that ensures retirees do not outlive their retirement income -- including one based on private accounts." Baker and Weisbrot note that the Bush administration is confusing the problem by making it primarily about Social Security: "One policy approach would be a renewed emphasis on efforts to close the racial gap in life expectancy and income" rather than the Bush administration's apparent tactic of "tak[ing] these race ... based differences as facts, and then adjust[ing] government policy accordingly."