“Social Security…has not contributed a dime to that deficit….”

On The Hill’s Congress Blog Rep. Woolsey wrote an entry last Friday (Aug. 27, 2010) demanding that Alan Simpson resign from the National Commission on Fiscal Responsibility and Reform (the presidential bipartisan group studying “solutions for the nation’s rising budget deficit and debt“).

Let’s not waste time debating the less important parts of her piece. Alan Simpson didn’t express himself well when he talked about Social Security. Granted. He later apologized. And as far as his status as as member of the commission, the White House has declined to remove him for his gaffe. So let’s move on to what is really should be analyzed in Rep. Woolsey’s post. She states:

Social Security should not even be on the table in deficit-reduction talks because it has not contributed a dime to that deficit, which has been caused largely by endless wars, reckless tax cuts and the recession.

However, President Obama did not place the same limits (i.e., excluding Social Security) on the commission’s mandate when he convened the commission’s first meeting:

It’s important that we not restrict the review or the recommendations that this commission comes up with in any way. Everything has to be on the table,” he said. “I’m not going to say what’s in. I’m not going to say what’s out. I want this commission to be free to do its work.

Emphasis mine. And what about Rep. Woolsey’s assertion that Social Security has not “contributed a dime to that deficit”? Well, technically both Social Security and Medicare are not part of the general federal budget because they are funded through separate trust funds. In fact, as the CBO informs us, “By law, the Social Security program is treated as an “off-budget” entity, and its financial figures are displayed separately from the rest of the budget.” However, the Treasury Department itself acknowledges that

…the federal government primarily uses the unified budget concept as the framework for budgetary analysis and presentation in the Budget of the United States Government. It represents a comprehensive display of all federal activities, regardless of fund type or on- and off-budget status, a broader focus than the trust fund perspective that may appropriately be referred to as the “budget perspective” or “government-wide perspective.” Social Security and Medicare are among the largest expenditure categories of the US federal budget. Together, they account for more than a third of all federal spending and the percentage is projected to rise dramatically for the reasons mentioned above.

And the already referenced CBO document also strongly comments:

Social Security benefits alone account for one-fifth of federal spending, and payroll taxes for the program account for one-fourth of federal revenues. Therefore, most economists, credit market participants, and policymakers, when they seek to gauge the government’s role in the economy and its effect on the credit markets, look at the total budget figures, including the figures for Social Security.

+++++

Few people can understand how Social Security can be off-budget and part of the budget at the same time. To reflect it as off-budget is to suggest that it is an independent financial entity, which it is not. The money received for and dispensed by the program flows to and from the federal Treasury, as it does for all other federal programs. More important, Social Security is a federal program by design: participation in it is mandated by federal law; all Social Security tax and benefit levels are set by federal law; and only the Congress and the President can alter the program through legislation.

Let’s therefore dispense with any idea that Social Security can’t be connected with our federal deficits or, more broadly, our debts. Rep. Woolsey is wrong to suggest that it “should not even be on the table in deficit-reduction talks” — isn’t she?

To better answer that question, let’s look whether there is any merit to the idea that Social Security is a financially healthy system and doesn’t or won’t contribute to overall federal debt. Here is a chart that tells the story quickly:

Perhaps unlike the CBO and EconomistMom.com, Lynn Woolsey hasn’t seen the revised projected shrinkage and still thinks everything is fine at least until 2017? Only she knows for sure.

The point is that, unless we bite the bullet NOW and institute reforms, Social Security and Medicare are going to contribute to our nation’s overall deficit in the coming decades, as this graph clearly illustrates:

 As the “EconomistMom” writes,

Not doing anything about Social Security now would be fine if either: (i) we knew what to do with the much bigger challenge of  much more rapidly rising Medicare spending (i.e., we knew how to flatten that health cost curve and were really on the way to doing it), or (ii) we didn’t know what to do to close the much smaller Social Security deficit.  But the fact is that it’s hard to know how to solve the Medicare problem and relatively easy (mathematically and economically) to solve the Social Security problem. 

She goes on to say that the least objectionable solution would be to raise the Social Security benefits retirement age.

I noted in my Aug. 18, 2010 post, Social Security, an observation that applies to the congresswoman’s latest screed too:

But this is a perfect example of where Lynn Woolsey and others in Congress refuse to accept the fiscal facts of life and want to continue profligately spending. Rep. Woolsey would apparently rather crash Social Security while maintaining full benefits than take reasonable actions to preserve it long term. This is fiscal irresponsibility we cannot afford. We cannot be represented by an ideologue who refuses to understand the practical realities of our precarious financial predicament both currently and in the foreseeable future.

Rep. Woolsey claims our massive deficits are “caused largely by endless wars, reckless tax cuts and the recession.” Certainly these all play their parts, although a new graph publicized today indicates that the eight years of the Iraq war cost less than the Stimulus Act:

But despite the congresswoman’s attempts to place all the blame for the deficit on other spending, Social Security (and Medicare) is also a very marked component and it needs to be addressed. Lynn Woolsey is wrong to want to keep Social Security off the table. The deficit commission should study how best to reform this considerable chunk of our national spending.

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About district6voter

A concerned Northern California citizen who believes Representative Lynn Woolsey ought to be replaced in November, 2010.
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2 Responses to “Social Security…has not contributed a dime to that deficit….”

  1. Pingback: Again, Lynn Woolsey, check your figures on public option savings! | Reasons To Vote Lynn Woolsey Out Of Congress

  2. Pingback: More about Social Security, Medicare, and ObamaCare | Reasons To Vote Lynn Woolsey Out Of Congress

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