If you read nothing else in this post, please remember this absolute truth:
There is no Social Security trust fund.
Every dime of shortfall between taxes collected and benefits paid – $37 billion in 2010 – must be borrowed by the government.
When the White House says otherwise, they are lying.
At one level, the argument about “fixing” social security is simply the frustratingly standard standoff between the ideologies of our radical political parties: we can’t afford it vs we have a moral obligation to do this no matter the cost.
The root cause of impasse however is not ideology but politics and fund raising. Sensible leaders on both sides are afraid to address any entitlement program because of the historically certain backlash from greedy, self interested voting blocks. Democrats have no intention of being sensible because they have been winning elections since FDR by protecting and enhancing entitlement programs of interest to two groups: the poor and the old. Both groups vote and both groups reliably vote for Democrats.
There are four reasons to address Social Security reforms now.
1. The program is now in the cash flow red and reform would reduce the deficit. Last year, Social Security paid out $37 billion more than it took in from worker’s FICA taxes.
2. Without reform the contribution to the deficit by the Social Security program will increase dramatically. It’s already $37 billion in the red folks and baby boomers have only begun to retire.
3. Making the program permanently self supporting and cash flow neutral is easy to do and easy for voters to understand. Voters would not object to the fixes.
4. If leaders and legislators cannot agree about fixing this program, there is no chance that they can address Medicare and Medicaid which, without reform, absolutely and unequivocally will bankrupt the nation.
As Krauthammer notes succinctly, the fix for Social Security is back-of-an-envelope simple:
· Raise the retirement age.
· Tweak the indexing formula (from wage inflation to price inflation).
· Means-test so that Warren Buffett’s check gets redirected to a senior in need.
Everybody, left and right, knows this is the answer and everybody knows this could be sold to voters because it wouldn’t hurt anyone that couldn’t afford it – everybody who isn’t rich or who is older than 50 or 55 wouldn’t be affected at all.
Therefore, I agree with Krauthammer that it is “shocking” for the White House to decide that they will politicize Social Security reform once again for calculated political gain. The nation is $14.2 trillion in debt which is increasing at the rate of $1.3 trillion per year. Never the less, the President has determined that being re-elected is more important than beginning to solve the fiscal problem. Disgusting.
While it is reasonable to argue that the party in control must lead, Republican leadership has still offered nothing but grandstanding. Disgusting.
Republican party leadership is trembling in fear about the coming Paul Ryan budget that is expected to address entitlements and thereby the deficit. The White House is cynically planning to use Ryan’s effort at national interest to stir up their progressive base and encourage backlash from greedy seniors. Disgusting.
The White House has signaled its intentions by declaring that there is no problem with Social Security:
Jacob Lew, President Obama's budget director, told reporters, the program "does not contribute to the deficit in the short term."
That is a flat out lie. Social Security added $37 billion to the deficit last year and will add progressively more to the deficit each and every year for a generation or more to come.
Lew's own budget shows Social Security paying out $56 billion more than it takes in this year.
According to the Congressional Budget Office the Social Security shortfall will total a staggering half a trillion dollars over the next decade.
How in the world do these SOBs not become immediate objects of ridicule? Where is the media?
Interest groups, such as AARP, and some Congressional Democrats insist Social Security isn't really losing money but merely withdrawing cash from the trust fund it has built up with excess payroll taxes since 1983.
That is a lie. It should be true but it is not – about $2.6 trillion that should be in the fund has been spent by Congress. If the money were there, it would keep the program solvent until approximately 2037. But the money is not there; the fund is a fiction.
Jack Lew was also the director of the Office of Management and Budget in the Clinton Administration. In the budget for fiscal year 2000, Lew said this:
Trust Fund balances exist only in a bookkeeping sense. They do not consist of real economic assets that can be drawn down in the future to fund benefits. They are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, reducing benefits or reducing other expenditures. The existence of large Trust Fund balances does not have any impact on the Government’s ability to pay benefits.
(Paraphrased from FY 2000 Budget, Analytical Perspectives, p. 337)
Throw the bums out.
Et tu, Jack Lew? by Charles Krauthammer Washington Post, March 11, 2011
What the Social Security Trust Fund Is Worth by Ezra Klein Washington Post, 03/11/2011
Our View: Fix Social Security Sooner, Not Later USAToday, 2/21/2011
http://www.usatoday.com/news/opinion/editorials/2011-02-22-editorial22_ST_N.htm?loc=interstitialskip
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