by Art Kelly
1. A front-page article in the Washington Post, "Social Security adding billions to U.S. budget woes," may be part of an effort to pave the way for Congress to cut benefits.
The article has a different headline on the internet, "The debt fallout: How Social Security went 'cash negative' earlier than expected." Regardless of the changing headline, it is hard to understand how the article would qualify journalistically for the lead article in the Sunday Post. It is possible there is some policy agenda involved.
Written by Lori Montgomery, the article does reference the deliberations the Super Committee--officially the Joint Select Committee on Debt Reduction, which is discussed extensively in the current newsletter on Conservatives and the Tea Party.
"Until recently, members of the Super Committee said Social Security had rarely come up in their closed deliberations," the Post reported. Note the phrase, "Until recently."
The article contains a mixture of true and misleading information. Some of the more outrageous statements include:
"Now, Social Security is sucking money out of the Treasury. This year, it will add a projected $46 billion to the nation's budget problems, according to projections by system trustees. Replacing cash lost to a one-year payroll tax holiday will require an additional $105 billion. If the payroll tax break is expanded next year, as President Obama has proposed, Social Security will need an extra $267 billion to pay promised benefits."
"Sucking money out of the Treasury" is just not an accurate way to describe the situation.
The latest monthly report from the U.S. Department of the Treasury indicates that, at the end of September, which was the end of Fiscal Year 2011, the federal government owed the Social Security Trust Fund $2.654,496 trillion. (The Medicare Trust Fund is owed $316.385 billion.) This is part of the $14.971 trillion national debt.
This money was surplus revenue from the payroll tax, which the government borrowed and then spent on its general operations. In turn, the Trust Fund received special issue, non-negotiable IOUs.
Now that the payroll tax is not producing enough revenue to pay out in Social Security benefits, the government has had to start paying back some of the money it borrowed from the Trust Fund. While that will add $46 billion to the annual deficit, it will not add a penny to the national debt because this intragovernmental debt is being exchanged for public debt.
As for the reduction in payroll taxes, which are made up from general revenue, this scheme has not helped the economy and should not be continued. If it is continued, it is certainly not the fault of Social Security that this revenue that is meant for seniors' retirement must be replaced from somewhere.
The Post accurately reported, "Many Democrats have largely chosen to ignore this shortfall, insisting the program is flush, citing the existence of the Trust Fund."
The newspaper is absolutely on-target when it pointed out there is no actual money in the Trust Fund: "The government has borrowed every cent and now must raise taxes, cut spending, or borrow more heavily from outside investors to keep benefit checks flowing."
For years, Congressman Ron Paul (R-TX) and Congressman Marsha Blackburn (R-TN) have introduced legislation to stop the raid of the Social Security Trust Fund. Their bills are:
HR 219, the Social Security Preservation Act, by Representative Paul and 9 cosponsors, to require the Social Security Trust Fund to contain real assets, not IOUs from the government to itself.
HR 234, the Savings for Seniors Act, by Representative Blackburn and 14 cosponsors, to require Social Security surpluses to be saved in a special account for seniors' retirement that could not be used by the federal government for other purposes.
Both bills have been referred to the Social Security Subcommittee of the House Ways and Means Committee but not yet been given a hearing.
The latest annual report from the Social Security Board of Trustees states that, despite the $46 Billion shortfall in payroll tax revenue, "Nevertheless, the combined trust funds (old age and disability) will continue to grow because projected interest earnings of $115 billion substantially exceed the non-interest income deficit."
The problem is the federal government borrows the interest that is due to the Trust Fund. Accordingly, HR 219 and HR 234 should be passed to require Social Security money to be saved, not spent.
And both the Super Committee, along with Congress as a whole, should be told there are plenty of places they can cut government spending, but they should not reduce Social Security benefits.
In fact, the Post article points out, "Few argue that Social Security is too generous. This year, the average retirement check is $1,181 a month, or about $14,000 a year."
Instead, the eligibility age for both Social Security and Medicare should be raised to 70, with provisions for persons to receive benefits sooner if medically necessary. In addition, there should be some means testing of benefits for high-income seniors.
Both of these changes would keep Social Security and Medicare in good financial shape for the future.