The GOP is providing misinformation about the long-term solvency of Social Security

A member of House leadership, Rep. Jeb Hensarling of Texas — my Congressman, by the way — was recently asked by a crowd of his constituents about Social Security. He replied:

“I want to change it…. I don’t want Social Security to go bankrupt.”

There is no danger of this. Dean Baker of the Center for Economic Policy Research wrote Rep. Hensarling this letter:

As it turns out there is little cause for concern [that Social Security will “go bankrupt.”] The recommendations of the National Commission on Social Security Reform in 1983 led to the growth of a large surplus in Social Security. This surplus was used to buy bonds and now Social Security holds more than $2.6 trillion in government bonds. As a result, the Congressional Budget Office’s projections show that the program will maintain full solvency through the year 2038. Even if Congress never makes any changes to the program, Social Security will be able to pay slightly more than 80 percent of scheduled benefits from then on.

If you were to retire at the normal retirement age for a person born in 1957, you would initially get a benefit of $34,802 (in 2011 dollars) per year through 2038 and starting in 2039, a benefit of $27,842 (also in 2011 dollars) each year for the rest of your life. Clearly a program that is projected to pay substantial benefits for decades to come is not in danger of bankruptcy.

Inside the country club, it was reported that you told the Greater East Dallas Chamber of Commerce that the budget crisis is fueled by growth in entitlement spending. In fact, under the law, Social Security can only spend money that came from its designated tax or the interest on the bonds held by its trust fund. It has no legal authority to spend one dime beyond this sum. In that sense it cannot contribute to budget deficits or the national debt.

As a co-chair of the “super committee” tasked with providing the rest of Congress recommendations on the nation’s deficit, I hope you and your staff will have the opportunity to further review the design and finances of the Social Security program. If you would like any additional background on the program, I would be happy to assist you.

Rep. Hensarling is on record as advocating the privatization of Social Security. While he may think of that as “saving it,” many see it as destroying it.

Advertisements

About Guy N. Texas

Guy N. Texas is the pen name of a lawyer living in Dallas, who is now a liberal. He was once conservative, but this word has so morphed in meaning that he can no longer call himself that in good conscience. Guy has no political aspirations. He speaks only for himself.
This entry was posted in Economics, Government social programs, News, Politics, Social Security. Bookmark the permalink.

2 Responses to The GOP is providing misinformation about the long-term solvency of Social Security

  1. chughesual says:

    There isn’t some vault where the money from the trust fund is sitting there, ready to be put back into Social Security when it is needed. The money has already been spent on other things, so the government will have to borrow from other sources to pay back the money it owes to SS, and this will increase the deficit. Also, the Social Security Trustees Reports are frighteningly inaccurate in the kind of time horizon you are talking about, look at the 2000 Trustees Report projection for 2011 and compare it to the current cash flow status.

    • Guy N. Texas says:

      Thanks for the comment. Four things:

      (1) The intricacies of Social Security accounting are beyond the scope of this blog. It’s true that, like virtually everyone else, the S.S. trustees failed to predict the housing bust and this dreadful recession we’re in the middle of. But 2038 is a long time off. Insofar as I know, there is not serious doubt about the 2038 figure, which many believe to be conservatively estimated. When the economy recovers, it will probably be pushed back to a later time, not an earlier one.

      (2) Social Security is, relatively speaking, a small, essentially “flat” and very manageable component of the long-term deficit even projecting out 50 years. Medicare is far more problematic. But that’s not what Rep. Hensarling was talking about.

      (3) I am perfectly open — as are most reasonable people — to tweaking Social Security so that it’s preserved for your generation and your children’s generation. That’s easily done. For example, Ezra Klein wrote recently in the Washington Post that ” Social Security’s 75-year shortfall is manageable. In fact, it’d be almost completely erased by applying the payroll tax to income over $106,000.”

      (4) Rep. Jeb Hensarling of Dallas — the Congressman mentioned in the original post — has no interest in minor tweaks to Social Security. Like most of those allied with the tea party wing of the GOP, he speaks in terms of “saving” Social Security, but what he has in mind is privatizing it. If you doubt that check any of the links below.

      If you think privatizing Social Security is a good thing, consider what current retirees would face in this current economic collapse if they did not have the guaranteed payments of Social Security. Do you know what CDs and money market funds are paying now? While a handful of elderly people — Warren Buffett, for example — are terrific investors, most are not. And that’s the reason Social Security is one of the most important commitments the citizens of this country have made to each other. Without it, the middle class in this country has little hope of a secure retirement.

      Here are links about Jeb Hensarling’s views on Social Security:

      http://fdlaction.firedoglake.com/2010/05/03/hensarling-supported-social-security-privatization-because-wall-street-was-safer/

      http://www.politico.com/blogs/glennthrush/0210/Dems_slam_Hensarling_on_Social_Security.html?showall

      http://tpmlivewire.talkingpointsmemo.com/2010/02/rep-hensarling-advocates-cutting-benefits-and-privatizing-social-security.php

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s