Reid ignores reality on Social Security
Image by Getty Images via @daylifeSenate Majority Leader Harry Reid says the Social Security program is "fine." How discouraging that someone who'll ignore an impending catastrophe for political reasons retains such a lofty position.Democrats would then raise taxes to confiscatory levels and tank the economy that would be needed to produce the revenue. The irresponsibility of this position is palpable. Republicans need to make an issue of how the Democrats are ignoring the problem.
Interviewed Sunday on NBC's "Meet the Press," Reid said he's bothered that people "run to Social Security" when "we start talking about the debt." "Social Security is a program that works and it's going to be, it's fully funded for the next 40 years. (So) stop picking on Social Security," he said.
When host David Gregory asked if the program was in crisis, Reid replied: "No, this is something that's perpetuated by people who don't like government." Then he reiterated his opinion that "Social Security is fine."
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Reid is simply wrong, though, when he says Social Security is "fine." Any reasonable analysis reveals that it's in deep trouble.
The entitlement, established in 1935, has historically run surpluses. But payouts have begun to exceed revenue. Last year, the program ran a temporary deficit of $41 billion, and this year it will also pay out more than it takes in.
Temporary becomes permanent, however, in 2015, when the red ink returns one year sooner than the government's previous projection. From there on out, Social Security is projected to pay out $7.9 trillion more in benefits than it will receive in tax revenues.
Reid isn't concerned with that number because he will, as Social Security dream weavers always do, remind the country that all the program needs to do is draw on the $2.6 trillion in surpluses it has generated through the years.
But that money's gone, spent by undisciplined lawmakers such as Reid. From where, then, will the funds come? Reid believes all Congress just has to do is raise income taxes to pay for Social Security's liabilities and the program will again be on solid ground.
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Here is an intelligent discussion of the problems with Social Security:
I have spent a lot of effort stressing about trillions of dollars of treasury bond IOU's issued to the SS trust. I've come to 2 conclusions, one of which seems to support Reid's position.
ReplyDeleteFirst, despite how outrageous and scary it may seem, we must have confidence in the "full faith and credit" of the US government when it comes to the IOU bonds. The reality is that the government can print as much money as they want. They've been doing this for more than 40 years, gotten away with it, and I for one cannot envision any kind of series of events which would cause this to change. For me, these 2 points achieve piece of mind that everyone will get their benefits without worry until 2037. Before then, the FICA cap must be lifted to extend the imbalance date.
Second, in agreement with Reid, the scare around the solvency of SS is a big smoke screen. I'm not quite sure which camp it comes from. But the more voters realize how much has been borrowed from SS to support non-SS programs, the more we'll realize how incompetent and inefficient our leaders really are.