Where Do We Go Now

Where Do We Go Now?

I have been carping on this topic for several years now but now it seems that the time has come for the buzzards to come home to roost.  Last week Cline Calhoun had a column in this paper bemoaning the sad situation in which the Social Security System finds itself.  This is especially alarming to me since I am in the first wave of boomers that will reach that magical cutoff point where that money that has been disappearing into the arcane pockets of the FDIC will begin to flow in the opposite direction.  Many of my compatriots have already begun to dip into the so called trust fund as a result of the unfortunate demise of their economy and suspicion they may not live long enough to get the maximum amount possible in return.

In what is possibly a sign of the approaching apocalypse, Mr. Calhoun and I find ourselves in agreement.  Since 1935 this money has been accumulating and paying benefits with nary a hint of red ink.  That is about to come to an end.  NPR reports that the Social Security Administration has taken in over 2.5 trillion dollars more than it has paid out.  A lot of people don’t know that but it shows the success of that New Deal program that has brought a modicum of security to the aged and infirm.  That money has not been put in a lockbox as Al Gore wished during the 2000 election but has instead been placed in that most secure of investments, U.S. Treasury Bonds.  Yes, it’s true.  Those investments, and I use that term loosely, have financed the budget deficit that now is somewhere in the neighborhood of 13 or 14 trillion dollars.  You may be surprised to find that only a small part of that is owed to the Chinese.

So now, this year the Social Security Administration is slated to pay out more than 35 billion dollars more than it receives.  This turning point was not scheduled to arrive for several more years but it has been hastened by declining revenues and early retirements.  But now it is time to pay the piper and let the “trust fund” kick in.  In 1935 it was not unusual for one to go on to his or her (eternal) reward before the (temporal) reward kicked in.  Now one can expect to enjoy (if that is the right term) several years of payments during which one may receive much more than he or she ever contributed.  The “trust fund” is expected to be rendered incapable of delivering full benefits past 2037 and that may be long enough for that to not be my problem.

Here are a couple of quotes that illuminate the difficulty facing dealing with the issue
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"It's very significant that this year, Social Security has more money going out than coming in," says Lamar Alexander, a member of the Senate GOP leadership team. "And it's very significant that in the next 10 years, Social Security will add a half-trillion dollars to the deficit. Social Security would be a good place to start when dealing with these mandatory entitlement programs that are 57 percent of our budget."

"Social Security has not contributed one penny to the debt, and as I've said before, people should leave Social Security alone," Senate Majority Leader Harry Reid said earlier this month. "I will do everything that I can in throwing my legislative body in front of any efforts to weaken Social Security."

Now, this should really be no problem since all that is required is for the U.S. Treasury to repay the Social Security Administration the money it is owed plus interest.  Realistically, that is going to be a bit difficult since we are already slashing budgets to the bone and repayment of that debt will have to be taken from other national endeavors that may or may not be worthy of their funding.

Social Security was never intended to be a retirement fund but only to provide a floor under which a citizen could not fall.  Obviously, in light of the increasing life span some tinkering is required but that still does not get us out of the present situation.  How we make room in the budget to pay existing obligations requires a lot of thought. 

I have often wondered just how successive generations of lawmakers allowed the situation to become this dire.  The fact of the matter is that we have failed to generate sufficient revenues to finance negative budgets.  You can gripe about deficits all you want but the truth is that the money went for things the people wanted such as defense spending, Social Security and Medicare.  The problem is that we did not have sufficient taxation to support them.  For thirty years we have bought into the lie that we can grow our way out of the problem through tax cuts.  Or the Cheneyism that “deficits don’t matter.”  I think both of those have been proven false but we still are preaching the sermon of lower taxes and growth. 

The fact of the matter is that if you want services they have to be paid for.  Taxation is how it is done.  Even the newly reinvigorated GOP is finding that a little difficult to do when it comes time to specify what will be cut that will make a difference.

That’s my take on Social Security.  I want the government to keep its hands off my Social Security and my Medicare.  Oh!  Mr. Calhoun and I can agree on quite a few things.  As can most of us.  Perhaps we need to accentuate the commonalties and set differences aside whenever possible.