Will It Go Round In Circles: Alan Simpson and the Social Security Trust Fund
|Written by Dean Baker|
|Friday, 18 June 2010 16:35|
Social Security Works' Alex Lawson had a wonderful exchange with former Senator Alan Simpson, the co-chair of President Obama's deficit commission, about Social Security. Alex politely peppered the former senator with reasonable questions about his views on Social Security, which led Mr. Simpson to alternately curse and lecture Lawson about the structure of the program.
In the course of an 8 minute exchange, Mr. Simpson repeatedly expressed the view that the government was somehow unaware (at least until recently) of either the baby boom cohort's existance or that life expectancy was increasing. He kept repeating, as though he had just discovered it, that life expectancy had increased from 57 when Social Security was started in 1937 to 78 years for today's newborns.
But the best part of the show was Mr. Simpson's discussion of the bonds held by the trust fund. Simpson was anxious to tell Lawson that we had spent the money. They had a bit of back and forth over what the money was spent on. (Simpson emphasized spending on highways and infrastructure, Lawson pointed to the money spent on wars in Iraq and Afghanistan and the Bush tax cuts.) But, both agreed that the money had been spent.
Simpson then implied that Social Security was broke because the money had been spent. Lawson pointed out that the trust fund held U.S. government bonds that are backed up by the full faith and credit of the U.S. government. Simpson acknowledged this point, even completed Lawson's sentence.
So, if the bonds held by the trust fund are backed up by the full faith and credit of the U.S. government, then what is the problem? The trust fund contains bonds that must be repaid just like the bonds held by Citigroup, Goldman Sachs, and rich people like Peter Peterson.
Where will the government get the money to repay the bonds held by Social Security? It will probably get the money from the same place it gets the money to repay the bonds held by Citigroup, Goldman Sachs, and rich people like Peter Peterson. We never ask where the government will get the money when Goldman Sachs or Peter Peterson want to cash in their bonds, why on earth would we ask that question when the issue is cashing in the bonds held by Social Security?
So, we have the land of non-sequitors where we keep hearing about an issue that has nothing to do with the health or solvency of Social Security. I just keep thinking of that old Billy Preston song.