Social Security Does Not Contribute to the Deficit: Lessons for the Washington Post
|Friday, 14 December 2012 05:31|
The Washington Post is getting very upset that people refuse to accept its assertion that Social Security contributes to the deficit. An editorial today angrily referred to the "mythology that, though the pension and disability program is facing ever-widening shortfalls, it isn’t contributing to the overall deficit."
It's not clear why the Post thinks of the law (even as acknowledged by Republican Social Security trustee Charles Blahous) that Social Security can only spend its designated revenue and no more, as "mythology." Social Security was set up by Congress as a stand alone program. Every official budget document includes the "on-budget" deficit, which excludes the revenue and spending of Social Security.
This would be comparable to setting up a public auto insurance system that collected insurance premiums and paid out claims, but was not allowed to tap federal revenue if it faced a shortfall. Presumably the Post would be able to understand that this auto insurance system was not contributing to the budget deficit, since the law makes it impossible to contrbute to the deficit. But somehow the Post wants to deride the law governing Social Security's finances as "mythology."
The editorial also includes the usual misleading comment that:
"The nonpartisan Congressional Budget Office estimates that, without reform, spending on Social Security and federal health-care programs will rise from 10 percent of gross domestic product today to 16 percent 25 years from now."
The vast majority of this increase is due to health care costs. Social Security is projected to increase by 1.0 percentage point of GDP over the next 25 years. Almost all of this is projected to be covered by Social Security's designated revenue stream as Social Security is projected to be able to make all payments through the year 2034 with no changes whatsoever and after that date is projected by CBO to be able to pay almost 80 percent of scheduled benefits.
The vast majority of the rise in projected spending is due to the fact that U.S. per person health care costs are projected to rise from more than twice the average in other wealthy countries to three or four times the spending of other wealthy countries. This is why serious people focus on restraining costs in the private health care system. If U.S. costs were anywhere near comparable to costs in other countries we would be looking at large budget surpluses in the distant future, not deficits.