Thursday, April 03, 2008

Chicken Little Says The Social Security Sky is Falling

Sen. McCain's new BFF Joe Lieberman insists that Maverick McGee doesn't support the privatization of Social Security, which might be reassuring... if it wasn't a total and complete lie. Trust your country with these folks, America!

This coincides with the latest round of conservatives cherry-picking the numbers to declare the end of Social Security is nigh. The Daily Kos' Devilstower looks at the new report himself and notes that "There's little change from last year's numbers, with the fund staying solvent through 2041, and a change in employee payroll deduction of less than 1% required to make the system solvent for at least 75 years." Less than 1%?!? Good lord, that's just too much! Kill it! Kill it!

As usual, it's Paul Krugman who has the best smackdown of the conservative freakout-
Social Security is a government program supported by a dedicated tax, like highway maintenance. Now you can say that assigning a particular tax to a particular program is merely a fiction, but in fact such assignments have both legal and political force. If Ronald Reagan had said, back in the 1980s, “Let’s increase a regressive tax that falls mainly on the working class, while cutting taxes that fall mainly on much richer people,” he would have faced a political firestorm. But because the increase in the regressive payroll tax was recommended by the Greenspan Commission to support Social Security, it was politically in a different box - you might even call it a lockbox - from Reagan’s tax cuts.

The purpose of that tax increase was to maintain the dedicated tax system into the future, by having Social Security’s assigned tax take in more money than the system paid out while the baby boomers were still working, then use the trust fund built up by those surpluses to pay future bills. Viewed in its own terms, that strategy was highly successful.

The date at which the trust fund will run out, according to Social Security Administration projections, has receded steadily into the future: 10 years ago it was 2029, now it’s 2042. As Kevin Drum, Brad DeLong, and others have pointed out, the SSA estimates are very conservative, and quite moderate projections of economic growth push the exhaustion date into the indefinite future.

But the privatizers won’t take yes for an answer when it comes to the sustainability of Social Security. Their answer to the pretty good numbers is to say that the trust fund is meaningless, because it’s invested in U.S. government bonds. They aren’t really saying that government bonds are worthless; their point is that the whole notion of a separate budget for Social Security is a fiction.


The Social Security system won’t be in trouble: it will, in fact, still have a growing trust fund, because of the interest that the trust earns on its accumulated surplus. The only way Social Security gets in trouble is if Congress votes not to honor U.S. government bonds held by Social Security. That’s not going to happen. So legally, mechanically, 2018 has no meaning.

Now it’s true that rising benefit costs will be a drag on the federal budget. So will rising Medicare costs. So will the ongoing drain from tax cuts. So will whatever wars we get into. I can’t find a story under which Social Security payments, as opposed to other things, become a crucial budgetary problem in 2018.

What we really have is a looming crisis in the General Fund. Social Security, with its own dedicated tax, has been run responsibly; the rest of the government has not. So why are we talking about a Social Security crisis?

Because a lot of rich people and ideologues at conservative think tanks have been pissed for decades that the marketplace can't get a piece of this fancy 'social safety net' racket. My heart weeps and weeps for them.

In all seriousness, even if there's a Social Security 'problem', there's a hundred other bigger ones waiting in line ahead of it. And privatization isn't the answer for any of them.


Post a Comment

Links to this post:

Create a Link

<< Home