The Social Security clock keeps ticking
Social Security has marched to a steady cadence of financial decline for the past 40 years. Every year, the size of the Social Security bomb gets bigger while the fuse becomes a little shorter. While that image might be a serious problem for you, it doesn’t seem to have captured the attention of anyone on Capitol Hill.
At this point, the program has roughly $22.4 trillion in promises that it does not expect to keep to those who can vote today. Someone who turns 80 years old today expects, on average, to live long enough to feel the impact of legislative neglect, which stretches all the way back to 1983.
It is interesting that Congress hasn't found time over the past few decades to address these worrisome prospects, but it has wasted an abundance of time on marginal proposals that have no material chance of consideration, much less passage.
Where on earth do these highly-paid legislators find the time?
To illustrate, Rep. Angie Craig (D-MN) has reintroduced the “You Earned It, You Keep It Act” last week. In her announcement, the lawmaker describes the bill as “a win-win” -- a fiscally responsible tax cut for seniors that puts money back in the pockets of middle-class Americans. Moreover, she claims that the bill would reduce “the federal debt by $8.9 trillion over 75 years.”
Wow. Voters get more and pay less. How could anyone oppose such an appealing deal?
Well, I do; because none of her statements are in fact true. The legislation would not reduce the $34 trillion national debt and the money doesn’t really go to middle-class Americans.
The analysis of the Social Security Administration projects that this proposal would lower the “debt held by the public,” rather than the “federal debt.” The former is a wonkish term used to justify spending, whereas the latter represents an existential threat to the country.
This projected savings is of course not based on actual current law. The United States would have $8.9 trillion less in the public’s hands if we lived on another planet, one in which benefits are paid whether there is money in the trust fund or not.
The bulk of the money flowing from this proposal would benefit wealthier beneficiaries, like those members of Congress who have chosen to work past the age of retirement, rather than middle-class Americans.
This legislative change is not paid for by the elimination of the wage cap, as promised by the legislation’s sponsor. The money needed to pay extra to the well-heeled retiree would come from general fund subsidies to the program to the tune of $6.3 trillion, every dollar of which adds to the federal debt.
In total, this proposal would cost $15.7 trillion, split between eliminating the wage cap and general fund subsidies. It is the same type of revolving-door arithmetic that enabled the problem in the first place.
The chief beneficiaries of this proposal would be members of Congress, who would be able to campaign for re-election without the overhang of $8.9 trillion in benefit cuts threatening their constituents. For just $15.7 trillion, every member of Congress would be able to buy 20 years of peace and quiet on the campaign trail.
Moreover, this proposal doesn't put money into the pockets of middle-class workers. It would remove cash from these average people to pay for extra benefits going to wealthier seniors.
Essentially, we will spend $15.7 trillion in order to make the problem of the parents a bigger problem for their children.
Once again, how could anyone oppose such an appealing deal?
Brenton Smith (firstname.lastname@example.org) is a policy advisor with The Heartland Institute.