by Art Kelly
Conservative columnist and commentator Charles Krauthammer has written an outstanding article to prove that the Social Security Trust Fund is a worthless fraud.
Replying to a dishonest claim by Jack Lew, Director of the White House Office of Management and Budget (OMB), that the Trust Fund is solvent until 2037, Krauthammer wrote, "That claim is a breathtaking fraud…The Social Security Trust Fund is a fiction."
Krauthammer cites--get this!--the OMB in the President's budget:
"These balances are available for future benefit payments and other trust fund expenditures, but only in a bookkeeping sense. The holdings of the trust funds are not assets of the Government as a whole that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury… The existence of large trust fund balances, therefore, does not, by itself, increase the Government's ability to pay benefits."
Krauthammer explains that the IOUs in the Trust Fund "are worthless."
Every penny from the Social Security payroll tax that each person has paid over his or her lifetime has been spent. It is gone--used to pay benefits when it was collected. The surplus was used for the general operations of the federal government--everything from paper clips to space ships.
The problem is that there is no more Social Security surplus. If the country ever comes out of the great recession it is in, there may again be some modest surpluses for a couple of years before permanently failing to raise enough revenue to pay benefits.
In theory, the Trust Fund contains more than $2.611 trillion in assets. In truth, the Congressional Budget Office affirmed, "Those trust funds are mainly accounting mechanisms and contain no economic resources."
To stop the practice of spending Social Security payroll taxes for NON-Social Security purposes, two bills have been introduced in the House: HR 219, the Social Security Preservation Act, by Congressman Ron Paul (R-TX) and 4 cosponsors, and HR 234, the Savings for Seniors Act, by Congresswoman Marsha Blackburn (R-TN) and 11 cosponsors. (Unfortunately, no equivalent bills have been introduced in the Senate.)
Both bills would require Social Security surpluses to be saved, not spent.
While it could be argued that enacting this legislation is equivalent to "closing the barn door after the cows have gotten out," there may, in fact, be a few "cows left in the barn." In addition to possible temporary surpluses, the interest due on the money borrowed from the Trust Fund is itself borrowed, thereby further increasing the IOUs.
The passage of HR 219 or HR 234 would stop the raids on the Social Security Trust Fund.
Furthermore, previous issues of this newsletter reported that, as the need to repay the Trust Fund becomes more severe, the drumbeat will increase for "entitlement reform," which is a euphemism for reduction in Social Security and Medicare benefits.
In an article, "Social Security reform splits White House political, economic teams," The Hill states, "The trust fund itself has a theoretical $2.6 trillion surplus, but that money has been spent by the federal government like general revenues. The payback has arrived at a very difficult time, when Washington is running a $1.6 trillion budget deficit."
If all of the money from Social Security had not been stolen (in a moral sense), Social Security would easily be able to pay benefits for many decades to come.
The money "borrowed" from the Social Security Trust Fund must be paid back.
Beyond that, Krauthammer recommends increasing the retirement age and means testing benefits so they are paid to seniors who need the benefits the most before sending checks to those very high income persons who don't need them as critically.