I saw this article about Social Security having problems because of the economy. The points about cash flow and how people are dealing with being laid off are all reasonable and I will not argue them.
However, I have real problems with how the writer glossed over the issue of receipts being less than payments in the next two years.
The deficits — $10 billion in 2010 and $9 billion in 2011 — won’t affect payments to retirees because Social Security has accumulated surpluses from previous years totaling $2.5 trillion. But they will add to the overall federal deficit.
Sounds good, right? If Social Security was a business that had $2.5 trillion in investments to draw on when things are tough it would be no big deal. The thing is this is the government and not a business. There is no savings, no surplus, and no Al Gore lock box where money is kept for a rainy day. Next year and the year after that we will spend $19 billion more than we make. That means that unless Congress runs a surplus during these two years, we will add to the deficit every year we have to draw from the accumulated surpluses.
If we are honest about the accounting gimmicks, we have $2.5 trillion in debt that is getting ready to be called in as people retire. We are in a difficult position and pretending we have until 2037 when the “surplus” runs out to solve the problem is not productive. Denial is a time honored political strategy when it comes to the third rail but we do not have eighteen years to come up with the ideal solution.
I do not expect we will have a solution right away especially considering the failure of the Bush Administration’s attempt to change Social Security. However, we do need to be honest about the situation we are in and point out misrepresentation in the press and elsewhere when we see it.
- FOP Vermillion