In a June 8 piece about a liberal summit in D.C. this week,the New York Times notes thatthe left’s support forprograms like Medicare and Social Security areoutof touch with fiscal reality, and that budget cuts elsewhere aren’t going to matter much:
In truth, none of the cuts in annual appropriations will significantly reduce the long-term deficit projections. Those are driven mostly by escalating costs for the benefit programs that liberals most aggressively protect–Medicare, Medicaid and Social Security–and by insufficient tax revenues to support them.
As has been noted many times, Social Security has amassed a surplus of over $2 trillion; that plus the expected revenue from Social Security taxes will keep the program solid for the next 25 years. Medicare is in much worse shape; why the two should be talked about together as if they are comparable drains on the federal government is unclear, unless one wants to associate Social Security with Medicare’s more severe problems.
For an illustration of the difference, see this graph from the Center on Budget & Policy Priorities:
The Washington Post‘s Lori Montgomery, meanwhile, goes after Social Security’s “defenders” today (6/9/10), who have given a “sinister cast” to the White House’s deficit commission, accusing it of having “a secret plan to gut Social Security.” Social Security advocates are using “heated rhetoric” and are “threatening to rally the public against” benefit cuts, which is seen as an “ominous sign” for the commission.
Of that group, Montgomery writes, “Adjusting Social Security benefits is a likely point of consensus, commission members say.” By “adjusting,” she presumably means “cutting” in some form. So it’s “ominous” thatSocial Security’s “defenders” are pointing out this reality about thedeficit commission.
Like the Times piece cited above, the Post portrays the issue as simple mathematics: “Budget experts say it would be difficult to significantly reduce future deficits without addressing the rising cost of Social Security.”
The Post lays outthe argument in favor of Social Security’s viability:
The program’s defenders argue that there is no crisis: If Treasury would repay billions of dollars in surplus Social Security taxes borrowed over the years, the program could pay full benefits through 2037. But many budget experts question whether supporting the existing benefit structure should be a cash-strapped nation’s first priority.
So “experts” are on the side of the Post, while “defenders” are out to protect the status quo. As if to reiterate that point, the next graph quotes an analyst at the Heritage Foundation about the “intellectual consensus” on his side. As Dean Baker notes at Beat the Press, this is in effect saying that the government should default on the portion of its debt held by the Social Security trust fund. That would be a rather radical idea–misappropriating trillions of dollars collected from working people that were to supposed to go to support the retired elderly, and instead using them to keep down tax rates for the wealthy–but one can count on outlets like the Post to portray it as a necessary solution offered up by the “experts.”
As has been noted many times, Social Security has amassed a surplus of over $2 trillion
Social Security is part of the federal government. It’s intellectually dishonest to treat Social Security as a separate entity. The Social Security Trust Fund represents money that the federal government owes to itself. Have you ever owed money to yourself? If so, did you treat it as an asset, a liability or an accounting fiction?
As Dean Baker notes at Beat the Press, this is in effect saying that the government should default on the portion of its debt held by the Social Security trust fund.
If benefit cuts are tantamount to default, didn’t we default back in 1983? How about tax increases? Are those tantamount to default, as well? The rules of Social Security have been changing ever since its inception. Initially, the rules were you pay 2% of your income, you get benefits at age 65. Now the rules are you pay 12.4% of your income, you get benefits at age 67. It’s hypocritical to start complaining about rule changes this late in the game.
I have a minor quibble, but following it would improve the quality of the debate. You write “Social Security has amassed a surplus of over $2 trillion.” The word “surplus” should be replaced by the phrase “reserve fund” or the word “reserve.” Social security usually _runs_ a surplus, with more revenues than outlays, which has allowed it to add to its reserve fund, accumulating its pile of Treasury bonds. The surplus is like water flowing through a hose, while ther reserve is like water sitting in a pool.
Sorry Bill, but that Trust Fund contains moneys collected through taxes paid specifically for that purpose. These taxes were raised during the 80s in order to accumulate a reserve to pay for the baby boomers. The fact that politicians took this money from this fund to pay for their pet projects does not absolve them from paying it back. Your example using the metaphor of an individual’s finances begs the question, it isn’t comparable. Further, if the government effectively defaults on payments for Treasurys it will surely have ripple effects when other holders of Treasurys like China get wind of it.
First, and foremost, Social Security is a trust fund paid into by working US citizens. It is not an ‘entitlement’. It belongs to those of us who have worked for decades, contributing to it for our retirement. Those politicians who consider it to ‘be in trouble’ are those who have forgotten that it is a trust. And, they have seemingly conveniently ‘forgotten’ that the US government has been using the funds in the trust as a a slush fund to shift trillions of dollars into ‘wherever causes’, leaving the US gov’t SS fund with nothing but IOUs in the form of treasury bonds.
I am more than tired of your decades at attempted obfuscation. There are more US citizens who know your ‘mechanisms’ than you could possibly imagine.
Why is it that when the politicians look at the deficit, their first thought is cut those programs that benefit the common people, their constituents? No one thinks about the huge drain 2 wars are causing our government. Are they untouchable? For me, whatever rationalization is used – national security, terrorism etc only covers up the vast profits that derive from the war industry, and who benefits from that? Not those of us who have to pay for them!
This is a totally false statement:
“The Social Security Trust Fund represents money that the federal government owes to itself. ”
The money that is supposed to be in the SS fund is the extra amount that the Boomers have been paying in since the 80’s to pay for themselves.
It represents money that the federal government owes to the BOOMERS, not itself. It’s OUR money, not anyone else’s. We paid for our parents AND ourselves for decades now, so we should get it back. Basically, we have cut our children some slack by putting money aside for OUR old age so THEY wouldn’t have to foot the whole bill, as we had to do with our parents.
It’s NOT an entitlement, it’s OUR MONEY, set aside to help our children so they wouldn’t be burdened with our SS payments. What part of that don’t people get?
How cruel can we as a society be. Half the jobs in this country barely provide for survival never mind retirement. Millions of people need this money desperately. Why is it we never hear of the privations suffered by older people who worked their entire lives? Many people forgo doctor visits therefore needed treatment is not received and situations get worse, even life threatening. Many folks do not have enough to eat for several days before they get their check. This country disgusts me. If you worked from the time you left school until sixty-five years old and you can’t afford a roof over your head, a decent car, food, and medical what is the point? I don’t get it, are people going to start eating each other. Making old and poor folks into dog food. How you treat the less fortunate is who you are.
A society requires all different kinds of workers and is responsible to make sure everyone can live out their days on dignity.
We can do much to keep Social Security solvent by continuing to gradually increase the full retirement age as people are living longer. Also, we can eliminate the salary cap above which people no longer pay into the system. Everybody benefits – everybody pays! As to Medicare and Medicaid, as long as we continue to rely on for-profit health insurance companies to pay for our health care it will be prblematic. We should just pass Medicare for All. It will cause a huge stink at first, but after 10 years or so everybody will like it as they learn how much better it is than the disfunctional system we have now.
I’m no baby-boomer. I’m 72. I too paid for my parents and they for their parents. My grandparents, who were beneficiaries did not contribute. / The statement …..”Treasury would pay billions of $s in surplus SS taxes borrowed over the years…” How did we allow this borrowing? Did legislators who authorized the borrowing worry about their own retirement income or health care when the raiding occurred? / I was part of California’s Proposition 186 in my relative youth. And I strongly agree – Medicare for All. We should at least receive what legislators voted for themselves. And, I too, am sick of paying for our Globocop actions around the world. // Jean Clelland-Morin
Between Bush’s ‘crusade’ to privatize Social Security, and the hype of the Rethuglican/wealthy conservatives in this country (including the same old ‘talking heads’ Beck, Rush, Insanity, Fox News, etc.), who fantasize seeing the working/middle-class get ‘screwed’, we boomers are caught between a rock and a hard place. Splashy (6/11) is right on. In the early 1980’s, Reagan ‘double-dipped’ into our FICA and we ended up paying for BOTH our parents and ourselves. Always remember, the middle/working classes in the U.S. are loathed by the wealthy, who avoid paying taxes by seeking out tax shelters…Grand Cayman sound familiar? By not paying into the ‘commons’ they are NOT paying their fair share. I guess it’s our generations curse to be politcally active in our ‘senior’ years and try like hell to save whats left of the middle-class in this country…for our grandchildren’s sake!
Sorry Bill, but that Trust Fund contains moneys collected through taxes paid specifically for that purpose.
First of all, the Social Security Trust Fund doesn’t contain money. It contains debt obligations. Secondly, what difference does it make what name you put on a tax? Taxes are taxes. Yes, Social Security taxes are regressive and don’t have any kind of poverty exemption, but they’re still a tax. Saying that those dollars are somehow special because they’re called Social Security taxes is absurd.
Your example using the metaphor of an individual’s finances begs the question, it isn’t comparable.
How am I begging the question? Why aren’t individual finances comparable to government finances? Well how about we take a corporate example. What if a corporation (Lehman Brothers, Enron, Bear Stearns, MCI Worldcom, Washington Mutual… take your pick) spent money and issued itself a bond in place of the money? Would that be an asset or a liability? Or, as I maintain, an accounting fiction?
First, and foremost, Social Security is a trust fund paid into by working US citizens. It is not an ‘entitlement’. It belongs to those of us who have worked for decades, contributing to it for our retirement.
It represents money that the federal government owes to the BOOMERS, not itself. It’s OUR money, not anyone else’s. We paid for our parents AND ourselves for decades now, so we should get it back.
The Supreme Court ruled that you have no contractual right to Social Security. But legality aside, Social Security does not owe you a dime. You may or may not get something from it, but it has nothing to do with what you’re “owed”. What if Congress slashes benefits? Does that magically change what you’re “owed”? What if you die the day before you turn 62? Sorry, no Social Security benefits for you!
These arguments are all really pie in the sky.Let us start with the premise that we are broke.Flat busted broke!On top of that we are in debt till the 12th of never.So are our kids…. and their’s after them….. and so on,and so on.Blame who ya want and i will give you the benefit of that doubt.Wont change a thing.This government is printing money as fast as their little arms can move.And taking loans from anybody in sight.IOU’s are falling like confetti at a ticker take parade.Those who actually produce in this country are under attack.Those who do not are subsidized and everybody else is suffering because of it.Now tell me again how many more entitlement programs you want, and how we will keep the ones we have.Lets just make it a thousand new entitlement programs payed for by a million new taxes and a hundred new printing presses.Hell put it all on my tab.
Why does the mainstream media consistently insist on mis-
representing Social Security and Medicare? There can be only
one answer. Publishers, as a group, don’t want to pay higher
taxes. Owners of NYT, WP would rather see the breaki-up of
Social Security andf Medicare. It’s all about keeping more
money in their pockets. Is that fair? Fair? What does that
have to do with it?
why are the rich getting subsidy and corproration get welfare
but the poor and old disabled are going to get kicked off ssi medicare because rich dont want to pay taxes all the tax cuts and the war caused 1.4 trillion deficit not social security and hope the democrats fixed it not get rid of it
The surplus has been used to reduce deficits. The surplus was supposed to remain invested for future benefits. The Reagan admininstratation increased the payroll tax and started borrowing from the trust fund to cover the deficits he created during his term in office. It is a separate fund from the general budget and does not relate to the national debt or the deficit.