For decades, Americans have been asking Congress to deal with Social Security in an honest, forthright manner. Unfortunately, last week 28 Senate Democrats signed a letter that does the complete opposite.
What did this letter consist of? The Hill reports that the signers do not want Social Security cuts of any kind – whether they be direct cuts or raises in the retirement age – included in budget discussions later this year. This is an irresponsible position, and is the first problem with the letter. Social Security has massive financial difficulties that are quickly getting worse, and ignoring them will almost certainly bankrupt the program or cause major financial problems for multiple generations of Americans.
Here is the second problem with the letter – from the article:
“To be sure, Social Security has its own long-term challenges that will need to be addressed in the decades ahead. But the budget and Social Security are separate, and should be considered separately,” the letter states.
This is a complete fallacy, and these Senators know it. In 2011 and 2012, the payroll tax holiday eliminated one-sixth of Social Security’s tax revenues for each of those years. For 2012, the total impact on the program’s deficits was $125 billion. In order to cover this shortfall, $125 billion was shifted from the general fund of the Treasury Department to the Social Security Trust Fund. Thus, approximately 10% of the 2012 federal deficit can be blamed on shifting funds from the Treasury to Social Security, meaning that particular Social Security shortfall is directly related to the health of the rest of the federal budget.
Related, Social Security Trustee Charles Blahous testified to Congress in June of this year that while massive shortfalls in Social Security funding can be covered by benefit cuts or tax increases, there may be a temptation for Congress to simply take dollars from the general fund. To paraphrase Blahous, this would show the idea that Social Security is a stand-alone program to be a complete farce.
To be fair, the program was originally designed to finance itself, as Blahous pointed out. And legally, it has a separate budget from the rest of the federal government. However, to claim that Social Security and the budget are entirely unrelated is completely false and a lie to the millions of people these Senators purportedly represent.