Letter to Rep. Chaffetz: Social Security Has Dedicated Revenue Stream
|Written by Dean Baker|
|Monday, 14 November 2011 09:45|
The Honorable Jason Chaffetz
Dear Representative Chaffetz,
While announcing your new Social Security proposal, you said that “…while some argue that the Social Security trust fund will keep the program solvent, that trust fund is simply additional funding that the government must borrow and the government is spending more than it takes in.”
This is not an accurate statement. Under the law, Social Security is paid for by its own dedicated revenue stream: the Social Security payroll tax, the Social Security trust fund, and the interest generated by the trust fund. It only makes sense to talk about Social Security as being solvent or insolvent because it has this legally dedicated stream of revenue, which includes the bonds held by the trust fund. If Social Security is viewed as being just another government program like the defense budget or the education budget, then it would not even make sense to talk about it being insolvent.
The latest projections of the Congressional Budget Office show that the program will remain fully solvent through the year 2038. The program will continue to pay a substantial benefit – about 80 percent of the full benefit—from 2039 onward, even if no changes are made to the program.
Characterizing Social Security as a program on the brink of insolvency as a basis for reform is a misrepresentation of fact. As a Congressman, it is important that your public statements on this be as accurate as possible. If you would like any additional background on Social Security, I would be happy to assist you.