Stop Saving Social Security

[ProSense]

Experts: Fiscal crisis threatens U.S. future



The fiscal crisis isn't social security as the above article claims, it's the national debt!

Stop Saving Social Security

By Josh Marshall

I said last night that I disagreed with the oft-stated claim that it just gets harder to 'fix' the non-existent Social Security crisis the longer you wait. In fact, as I thought about Obama's proposal to remove or retool the cap on Social Security taxes I got to thinking that it's not just not necessary to do right now but that it actually might be a bad idea altogether.

Many have argued that having this debate at all buys into the right-wing argument that there's a 'crisis' that needs to be solved and thus that the politics are all wrong. But put that aside, let's talk about whether it makes sense even on substance.

When it comes to the policy and number-crunching nitty-gritty of Social Security I'm definitely an amateur. But I think I've got a decent sense of the political-economy of the question. We need to remember that now and for at least a decade into the future Social Security is actually subsidizing the rest of the federal budget. The program brings in much more than it pays out. As we all remember from the voluble debates two years ago, the surplus is being used to buy US government bonds which go into the Trust Fund. And that socked away money will keep the program solvent through the middle of this century as the baby boomers retire, and revenues in no longer cover promised payments out.

We've been doing that for about a quarter of a century.

The problem on the political side of the equation is that the enemies of Social Security have spent a couple decades arguing that the Trust Fund doesn't exist or that it is simply a bookkeeping device with no true financial meaning. If that's true, it means that American workers have spent the last twenty-five years using their payroll taxes to subsidize general revenues and make it easier to float big tax cuts for upper-income earners without getting anything in return.

If we start pumping a lot more money into Social Security coffers now it will by definition go into more government bonds, which is another way of saying that it will go toward funding our current deficit spending. In fact it will enable more deficit spending and probably more upper-income tax cuts because it will make the consequences of both easier to hide.

If we want to push the buffer of the Trust Fund further out onto the horizon, then fiddle with payroll taxes when Social Security would need to start dipping into Trust Fund. In other words, in a decade or so. I see no reason why this approach doesn't work just as nicely then as it would now.

As Paul Krugman noted in the interview I did with him a few weeks ago, the window of time we had to seriously pare down the national debt to prepare for the retirement of the baby-boomers is close to over. Still, though, our best way of ensuring the future health of Social Security is to stop running up the national debt now. So I'm very reluctant to put more payroll taxes in the pot while we're still running big deficits because of the Bush tax cuts. The money will just go to subsidizing that irresponsible fiscal policy.

more

Social Security: No Crisis

Stop raiding Social Security!

[peace13]

1. To add to the "stop raiding'...

and put back what you stole.

[sandnsea]

2. Get the money back from the rich

roll back the Bush tax cuts AND add the FICA on the wealthy, start paying down the debt so that if we do need some extra money to pay boomer retirements, we'll have the leeway to borrow it for a few years. That's what we should have done in 2000.

[ProSense]

3. That would have been great.

Look at 1998 to 2000, it levels off and actually goes down a little (slightly shorter bar). If that trend had been sustained the curve would have arched upward.

[sandnsea]

4. That was the plan back in 1987

when they raised the FICA taxes on us. Looking back, JK was right again, we should have had a balanced budget amendment so that we wouldn't be where we are today. With all that extra FICA money, there is absolutely no excuse for these deficits. Except Republicans who want to use up all the money so they can kill social security.

[bighart]

6. to get the money "back" from the rich

would imply that the government was:
1) the source of the money
or
2) the government had possession of the money at some point.
Neither of these are the case. The more money people make the better the
attorneys and accountants they hire to find every possible take deduction
they can.

[sandnsea]

7. The government absolutely had possession of my FICA taxes

and absolutely gave it to the rich through the Bush tax cuts.

[slipslidingaway]

5. K&R Well there is a problem, the 2 Trillion in Trust Funds assets

have been used for tax cuts and increased military spending. When taxes have to be increased to continue SS (2018 ?) the people need to be aware of this fact. And the Dems who funded this war should have been saying "We are spending the Social Security surplus" every single opportunity, the same should have been said every day when they were debating the Bush tax cuts. Maybe I missed all those statements???

The government will rob the people, if the people let them :(


"Lifting the payroll tax cap while Social Security is still running a big surplus not only solves a problem that doesn't exist it enables the very policies that put the program in danger. Perhaps this is all another way of saying that I'm not a fan of putting more hens in the hen house while the foxes are still at the door, or even in the house."


2 Trillion
OASI and DI Trust Funds, combined, 1957 and later
http://www.ssa.gov/OACT/ProgData/funds.html


And prior to this Senator Hollins was speaking out on this issue in the late 80's after the SS tax increases.


FOR IMMEDIATE RELEASE: April 8, 1998

http://www.senate.gov/~feingold/listening/releases/98/lincoln.html

"FEINGOLD: PROTECT SOCIAL SECURITY TRUST FUND
Pay-Go rule essential to prevent irresponsible spending

Stevens Point, WI - Sen. Russ Feingold warned that lawmakers must keep working toward a true balanced budget, and avoid the temptation to spend the so-called budget surplus.

"The truth is that even though we've made progress, the budget isn't really balanced, and any attempt to spend this "surplus" we've heard about could seriously threaten the Social Security Trust Fund," Feingold said. The Congressional Budget Office estimates the 1998 unified federal budget will run a $8 billion surplus, but if Social Security is excluded from that calculation, that surplus becomes a $92 billion deficit.

"Social Security will end up picking up the tab for any irresponsible spending or tax cuts. The choices we make now will directly effect how much we have left to pay for future Social Security benefits," Feingold said.

Some lawmakers will argue a budget surplus means the Senate can abandon the Pay-Go rule, ("pay-as-you-go"), which requires new mandatory or entitlement spending or new tax cuts be paid for with budget cuts or new revenues. But Feingold explained that abandoning the Pay-Go budget rule would mean new spending or tax cuts would be paid for by Social Security, which has been included in budget calculations and accounts for the surplus.

Feingold has introduced legislation with Sen. Ernest Hollings (D-S.C.) making it clear the Pay-Go rule must remain in effect until the budget truly runs a surplus..."

[slipslidingaway]

8. Future Medicare costs are barely mentioned in the debates and

I agree with the author that we could see a major crisis unfold in the next 10-20 years with the costs of Social Security Trust Assets that need to be repaid, the high number of people moving into the Medicare system and the needs of our veterans. Then add to that the environmental problems and shrinking resources, we can either fight one another or try and work on these problems together.

from your link

"...No major presidential candidate has put forward a detailed plan to fix Social Security and Medicare's long-term finances. Many of them acknowledge that there's a pending problem, but they confine their remedies to vague goals they'll seek or modest halfway measures.

Meanwhile, experts say, mounting pressures to spend ever more on health care, fewer active workers to pay taxes to sustain retirees' benefits and growing interest payments on the national debt all could combine to create an unparalleled economic crisis..."

[ProSense]

9. Kick! n/t

[TheFarseer]

10. balancing the budget and start the "Lcoked Box"

would do more for SS than pretty much anything else. I'm afraid that ship has sailed now that we're 9 trillion in the hole. Now I'm thinking - work towards the above scenario of course - but also a combination of raising the retirement age, offering a lump sum upfront to certain retirees, and lifting the cap of a donut hole cap might be the best option.