Surprise: Social Security benefits are for children too

You have heard of greedy geezers: that mythical army of militant seniors out to defend their Social Security benefits at any cost, even if it robs their own children and grandchildren of their futures.

The greedy geezer trope, invented by now-retired Senator Alan Simpson of Wyoming back in 2012, is just the most colorful example of the way that politicians have tried to pit young against old in policy debates about the future of Social Security.

But these arguments are nonsense, because Social Security does much more than provide retirement benefits to the elderly. It is a broad social insurance program, and what it insures against is the risk of lost income in a household – everything from retirement to disability or death of a breadwinner.

And children are important beneficiaries of the Social Security program. A study released this week underscores the importance of Social Security’s multigenerational impact – in particular, the program’s outsized impact on poverty rates among children of color.

Nine percent of all American children under age 18 benefited from Social Security in 2014 either directly or indirectly, according to research by the Center for Global Policy Solutions (CGPS), a nonprofit research and advocacy group. That translates to approximately 6.4 million children – and it was equivalent to 11 percent of all Social Security beneficiaries.

Social Security Administration data shows that 3.2 million children received Social Security benefits directly in 2014, usually as the surviving dependent of a deceased parent or guardian (43 percent) or a disabled worker (42 percent). The remaining 15 percent were children of retirees.

But the CGPS study went further, using additional federal data sources to measure the number of children who live in extended families that receive Social Security. That wider lens reveals the aforementioned figure – 6.4 million children.

The study underscores Social Security’s importance in fighting poverty rates, especially in households of color. These rates are far too high already, and would soar to stunning levels in the absence of Social Security benefits. CGPS found that 40 percent of African-American children live in poverty – a figure that would jump to 58 percent without Social Security. In Latino households, 28 percent of children live in poverty; the figure would be 45 percent absent Social Security.

And reliance on Social Security in minority households is on the rise. The number of indirect child beneficiaries in Latino households, for example, rose by 42 percent on average annually between 2001 and 2014.

“We often talk about Social Security reform in the context of retirement,” says Maya Rockeymoore, CEO of CGPS. “The fact of the matter is that skews our understanding of who the program serves. Social Security serves people of all ages, from birth to death – and the number of dependent children is too often ignored.”

DEBATE SHIFT

The takeaway here: Social Security is a multi-generational program, so do not believe the zero-sum game arguments that often are raised in the context of Social Security reform discussions.

That debate has shifted significantly in recent years. The program has a long-range solvency problem: the combined trust funds for Social Security’s retirement and disability benefits are projected to be depleted in 2034. At that point, Social Security itself would have sufficient revenue from current taxes to pay only 79 percent of promised benefits.

The problem can be avoided by raising additional tax revenue, cutting benefits or through some combination of both approaches.

Arguments in favor of cutting benefits have been countered over the past three years by a growing movement in favor of reforms that would couple restoring long-range solvency with some modest benefit expansion targeting households most in need. And hard-core progressives are pushing for a broad expansion of benefits.

Hillary Clinton and Donald Trump both oppose benefit cuts, and Clinton favors modest expansion. President Obama, who flirted with benefit cuts earlier in his administration, said in June that he, too, supports expansion. More than 20 expansion bills have been floated in Congress, with proposals ranging from targeted increases for vulnerable retirees to larger increases in benefits for all retirees.

Targeted expansion could include adjusting Social Security’s progressive benefit structure to deliver higher amounts to lower-income retirees, lifting Social Security’s minimum benefit for very low income seniors, or enhancing the program’s survivor benefit.

The CGPS report adds weight to arguments for expansion – because it underscores the program’s broad, positive economic impact. “Policymakers should understand that this is an important program for vulnerable people across the age spectrum,” says Rockeymoore. “So when people argue that Social Security should be cut, our counter is that the data shows that would be devastating for our country – it needs to be expanded.”