CEPR - Center for Economic and Policy Research


En Español

Em Português

Other Languages

Home Publications Blogs Social Security Monitor Letter to Senator Kerry on Social Security Comments

Letter to Senator Kerry on Social Security Comments

Written by Dean Baker   
Wednesday, 10 August 2011 12:25
The Honorable John Kerry
218 Russell Senate Office Building
United States Senate
Washington, DC 20510

Dear Senator Kerry:

In a recent interview you said that our nation's problem is one of "long-term debt." You described this debt as "...the structural debt of Social Security, Medicare and Medicaid measured against the demographics of our nation. That then juxtaposed to the lack of jobs and job creation and growth."

In reality, this is not the case. Social Security does not contribute to the debt in either the short-term or long-term. Under the law, Social Security can only spend money that was raised through the designated Social Security tax or from interest on the bonds purchased with this money. The latest projections from the Congressional Budget Office show that the program can pay full benefits through the year 2038 and slightly more than 80 percent of scheduled benefits in subsequent years.

However, this projected gap can only be made up by additional funding approved by Congress. If there are no legislated changes and this projection proves accurate, then less than the full benefit will be paid, and therefore Social Security will not be contributing to the deficit even in the years after it is first projected to face a shortfall.

While it is true that the lack of jobs and jobs creation is significantly impeding the growth of our economy, Social Security is not. And as the discussion over Social Security continues in Congress, I hope you and your staff will have the opportunity to further review the design and finances of the program. If you would like any additional background on the program, I would be happy to assist you.

Comments (2)Add Comment
What Social Security Is & Isn't
written by tovangar2, August 17, 2011 9:45
Dean, You got a least one of your facts wrong in your letter. The "80% of scheduled benefits" is off the mark.

There are so many lies told about Social Security plus much confusion and ignorance. Kerry is criminally incorrect. Another example of this is the Head of the World Bank who just called Social Security "a big-ticket welfare program" and insists that it must be cut. The man's an idiot and/or a liar.

I'm going to try once more to briefly explain Social Security for anyone who's interested. I am far from expert so If I get anything wrong, please correct me.

Trust Funds & Federal Funds

First, a note on the difference between Trust Funds & Federal Funds. It's simple, Trust Funds consist of money collected from the public, held in trust & then paid out when needed. Federal Funds consist of the money collected from the public and budgeted for discretionary spending as decided by our public servants in Congress. These are two entirely different things (which is why they're itemized separately on a pay stub).

The Unified Budget

Much confusion comes from the Unified Budget, which lumps Federal Funds & Trust Funds together making it appear that Social Security & Medicare devour over a third of America's budget. However, the only funds that can be "budgeted" by Congress are Federal Funds. Trust Funds don't come into it. Social Security has NOTHING to do with the US budget and in NO way adds to the debt or the deficit. The Unified Budget was instituted during the Viet Nam War as a deliberate deception by the government to try to hide the cost of the war, a deception which continues to be very successful today. (Check out the War Resisters Leagues' famous pie chart: "Where Your Income Tax Money Really Goes" http://www.warresisters.org/si...-color.pdf

Social Security Defined

Social Security is a self-funded Trust Fund that exists to to pay for our national retirement, disability and life insurance program. There are no Social Security costs to the government apart from the administration of the Trust Fund. Workers (and their employers) pay into it over their working lives, the government holds the money in trust, and then the fund pays out when each worker (or their survivors) need it. Social Security runs a surplus ($69 billion in 2010) which the Treasury annually borrows (loots) from in exchange for worthless, non-negotiable IOU's. (How, and from who, they got permission to do this I do not know - but it certainly abrogates the meaning of "trust".) The money "borrowed" from the annual surplus is then added to the Federal Funds to be spent on whatever Congress decides (including wars, bank bailouts, etc.). It's really a stealth tax. And if the Treasury ever paid the money back to Social Security (doubtful) it would have to borrow it from a third party. The interest on the loan would be yet another burden on the taxpayer.

Social Security benefits everyone. You know when you'll turn 65, but not when or if you'll become disabled and need Social Security, that's just an accident away. If benefits are reduced or ended families will be expected to take up the burden for their parents, grandparents and disabled relatives, that is if the former beneficiaries are lucky enough to have families that are willing and able to do that. There's NO safety net for everyone else... (continued)

written by tovangar2, August 17, 2011 9:48
...(continued from my previous comment)

"It's Where the Money Is"

Just about everything else that could be looted, has been looted so the avaricious elites have turned their attention to Social Security. The desire by some to inflate the apparently easily-looted surplus by keeping contributions at present rates but paying out much less is one goal of all the talk about "reforming" Social Security (and is another stealth tax on working people). Another is the Big Prize, the endlessly tempting (to the nefariously-inclined) Social Security reserve which presently stands at $2.6 trillion.

The elites are after Social Security for the same reason Willie Sutton robbed banks, "It's where the money is". But it's our money, (supposedly) held in trust for us. We really do need a "lock box" for it. Too bad that that guy who got elected President in 2000 didn't get inaugurated.

Debt Deal Disaster

But now, with the obscene Debt Deal, if the corporate-owned members of the even more obscene "Super Committee" cannot decide how much to loot from Social Security, it will automatically be gutted. It will be a tragedy, an unimaginable affront to basic decency and a cataclysmic human catastrophe if the American people allow this to happen.

There Is No Social Security "Crisis"

Social Security is not in trouble and does not need "reform". It is incredibly successful, enjoys broad and deep popular support and is the most fiscally responsible component of the government. Polls have repeatedly shown that the public is more than willing to pay more into it to keep it vital.

However, at the moment, Social Security is actually denied certain income it should have. For example, the cap on earnings should certainly be ended for fairness if nothing else. (workers now only pay Social Security on the first $106,800 earned per year.) Also earnings from wealth should be taxed (and Social Security paid) as income rather than at the much lower capital gains rate which would also be the fair thing to do.

Even without ANY changes, Social Security is funded to pay out full benefits for the next 25 years. It's good for 90% 50 years into the future and 87% at the 75 year mark. A projection that puts every other part of the government to shame. No other government department even does 75 year projections.

The Social Security "crisis" is a sham, just another attempt to terrorize the public into accepting the unacceptable. (Same as 911 = PATRIOT Act & Afghan War, threat of WMD = Iraq War, threat of financial meltdown = Bank Bailout, threat of default = Debt Deal to name a few recent examples.) For reasons completely mystifying to me this easily recognized ploy works every time. The elites have managed to turn Social Security, one of the too few decent things this country has ever done, into the "enemy".

PLEASE follow the link below and scroll down to listen to (actual) independent expert Virginia Reno explain Social Security, why it's so strong and why Obama had NO right put it on the table.


Write comment

(Only one link allowed per comment)

This content has been locked. You can no longer post any comments.


Support this blog, donate
Combined Federal Campaign #79613