One of the most frustrating things about being a liberal or a conservative – or anyone in between, for that matter – is that both sides seem to shoot their arguments right past each other without hitting head-on often enough. Social Security is a perfect example.
Vermont’s own ultra-liberal Sen. Bernie Sanders says, “Republicans have falsely claimed that Social Security is going bankrupt and is in crisis. This is a lie.”
It’s easily verifiable that Republicans (and other fiscal conservatives) do indeed claim Social Security is going broke, so how can Sen. Sanders and other liberals be so categorically staunch in their denial of such?
This is where the arguments have to meet point-for-point, and in detail, rather than devolve into the banal generalities that often characterize both sides’ rhetorical efforts.
What it all comes down to is what constitutes the truth, as opposed to what constitutes the whole truth. Here’s what Sen. Sanders says about Social Security’s solvency:
“Social Security is running a $2.6 trillion surplus that is projected to grow to over $4 trillion by the year 2023. The non-partisan Congressional Budget Office has estimated that even if no changes are made, Social Security will be able to pay full benefits to every eligible American until the year 2039. After that, it will still have enough funding to pay about 80 percent of promised benefits.”
That is the truth.
But let’s not breathe a sigh of relief yet, because we still haven’t gotten to the whole truth, which requires a bit more explanation:
According to the Social Security Trustees Report, payroll taxes collected since 1983 should last until 2037. But this is only in the Social Security Trust Fund, which is an important distinction to make; by law, this trust fund has to purchase Treasury Securities with its tax income. In other words, the trust fund is full of IOUs from the U.S. Government, and no cash.
In fact, the Federal Budget acknowledges this on page 421, in this quote: “The existence of large trust fund balances, therefore, does not, by itself, increase the government’s ability to pay benefits.”
Because the U.S. Treasury must pay back those IOUs when they’re due, some might argue that it’s as good as cash, but it’s not. The only ones who can pay U.S. Government debt to the Social Security Trust Fund are you and me – the taxpayers. In short, we’ll have to either raise taxes or borrow more to pay the IOUs. So make no mistake; the money isn’t there, and we have to come up with it, no matter how resolutely Sen. Sanders accuses his political opponents of being liars.
So what about the actual cash flow coming into the Social Security Trust Fund? Since Sen. Sanders is fond of pulling figures from the Congressional Budget Office, let’s do that: The CBO’s 2010 estimate (released in October) is that the trust fund will be paying out more than it takes in by 2014, and that this deficit will continue to grow in perpetuity if nothing is done.
That’s a big “if.” So what should be done?
I do not pretend to have a lot of answers, and Social Security is no exception. But it seems that there are at least a few low-hanging fruit to be plucked. For one thing, Social Security should be means-tested. It’s absolutely idiotic that Social Security benefits are paid to everyone, regardless of their need for this cash. Despite the fact that millionaires get Social Security checks, liberals consistently portray reform efforts as stealing food and medications from financially precarious senior citizens.
The President’s independent commission report on how to reduce the federal deficit and debt has excellent ideas put together by a bipartisan group, and I won’t second-guess their recommendations without having read the final, full text. Similarly, lawmakers like Wisconsin’s Paul Ryan and others have fiscally responsible approaches to reform. They might actually get a hearing in upcoming Congressional sessions.
Social Security – and all taxpayer-funded assistance, for that matter – should be seen as a last resort. The first resort for retirement should be savings in stocks, bonds, gold, bags of cash buried in the back yard, or whatever else meets with a person’s risk tolerance. That would not only promote self-reliance and frugality, but also give a significant bump to the stock market and the bond markets, creating greater prosperity for many more people, which in turn results in more tax revenue for the government. Even Sen. Sanders would like that outcome.