The President's debt commission has been meeting in secret. Alex Lawson of Social Security Works has been standing outside the closed doors and trying to record interviews with Commission members as they enter and leave. Here is a small excerpt from an interview that Lawson did with former Senator Alan Simpson, co-chair of the Commission, that gets at a fundamental difference in the way that people look at the Social Security trust funds.
SIMPSON: There is no surplus in there [the Social Security trust funds]. It’s a bunch of IOUs.
LAWSON: That’s what I wanted to actually get at.
SIMPSON: Listen. Listen. It’s 2.5 trillion bucks in IOUs which have been used to build the interstate highway system and all of the things people have enjoyed since it has been setup.
LAWSON: Two wars, tax cuts for the wealthy.
SIMPSON: Whatever, whatever. You pick your crap and I’ll pick the real stuff. ...
By the way, the rest of the interview shows that both Lawson and Simpson suffer from important misconceptions. Lawson thinks that the Social Security trust funds are still growing. Due to the recession they are contracting slightly at this time. They might grow a little for a short time if we make a rapid recovery from the recession but they are destined to start contracting in a few years under even the most optimistic forecasts. For his part, Simpson is unaware that Social Security actuaries predicted fairly accurately the increases in life expectancy that have occurred over the nearly 75 years that have passed since the creation of Social Security in the U.S. Increases in life expectancy are not the reason for Social Security's long term funding problems. The blame goes mostly to benefit increases without corresponding tax increases.
I have always wondered what we ought to invest the Social Security trust funds in if not U.S. government bonds. If the trust funds were invested in stocks and bonds they would own a good part of the U.S. economy. I do not think that either conservatives or liberals would be comfortable with that idea. Those who claim that the Social Security trust funds are meaningless abstractions do not want the trust fund monies invested in something other than U.S. government bonds. They want the trust funds and all of Social Security to cease to exist. They are just afraid to say so.
4 comments:
Thank you for highlighting the works of the Debt Commission. And I agree with your assessment that much of SSA's problems stem from increases in benefits without increases in income. But I doubt there will be the political will to arrive at fixes for the problem until we have a full blown crisis.
Congress never locks the stable doors until the horses have been stolen.
SSA Trust Fund? Is this a joke? It should be called the SSA IOU Fund. This is a crisis of massive proportions and our representative's need to address this issue now. If the younger generation has their benefits drastically cut then why pay into the system?
Paul Krugman put his 2 cents into the ring on this one, furtunately, as he usually does, on the side of good judgement. The deficit commission is getting serious heat for this.
http://krugman.blogs.nytimes.com/2010/06/21/zombies-have-already-killed-the-deficit-commission/
And it may be an SSA IOU fund, but millions of Americans and I hold those IOUs, and I expect to get paid back. It came directly from my payroll.
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