On the February 24 edition of National Public Radio's (NPR) All Things Considered, correspondent Brian Naylor, who has covered Congress for NPR for almost ten years, failed to correct a misleading claim made by Representative Chris Chocola (R-IN) about the impact of removing the cap on income subject to Social Security payroll taxes.
Reporting on a town meeting on Social Security reform that Chocola hosted during which a participant suggested that it would be better "to raise the money that people pay into it as they get bigger and bigger salaries," Naylor said, "Chocola says raising or eliminating the cap on earnings that get taxed for Social Security, now $90,000, would only put off the problem." Naylor then played a clip of Chocola stating, "If you eliminate the cap on earnings, so if you made a million dollars a year, you'd pay Social Security taxes on all that million, you would delay the problem by seven years."
As Media Matters previously explained (when The New York Times echoed a similar claim by House Majority Leader Tom DeLay (R-TX)), this seven-year figure refers only to the effect that lifting the cap would have on the date when the program stops running annual surpluses. Under current law, the Social Security trustees predict that this will occur in 2018; lifting the cap would extend this date to 2025. But this seven-year figure conceals the impact that lifting the cap would have on the real "problem" that Social Security faces: its long-term inability to pay all benefits promised under current law.
The Social Security trustees project that removing the income cap entirely would enable the the program to pay all benefits currently promised for 37 more years -- from 2042, as projected under current law, to 2079. That's because if the cap were eliminated, the surpluses accumulated prior to 2024 would be substantially larger than projected under current law, and subsequent annual deficits would be smaller. These accumulated surpluses, combined with the increased revenue stream from payroll taxes, would be sufficient to pay benefits much further into the future.
Finally, since proponents of privatization often focus on the 2018 date as a crucial turning point toward insolvency and crisis, NPR's Naylor should also have noted that Social Security's chief actuary recently informed the White House that under President Bush's proposal to let workers divert a portion of payroll taxes into private accounts, "[a]nnual cash-flow deficits (negative annual balances) appear in 2012, or six years earlier than under current law," as The Wall Street Journal reported on February 8.