I must admit that I don’t really understand what is going on with Social Security. I understand that today’s workers are paying for today’s retirees. I understand that, because of the baby boom and the recession, there are not enough people paying into Social Security to support those who are retiring. I get that. However, the first thing I don’t understand is why we didn’t plan for something which we knew was coming. Since the government has borrowed from the Social Security Trust Fund when it needed money why can’t the government carry Social Security for a while until the Baby Boomers work their way through the system. Apparently the government cannot help Social Security out of this one because of our country’s debt and giant deficit. That leads to the second thing that I don’t understand. Our government owes the Social Security Trust Fund something like 4.5 billion dollars for which, as I understand it, the Social Security Trust Fund was given US Bonds. Now the government wants to lower Social Security payments by adopting a chained Consumer Price Index which will lower COLA adjustments.
We have the government borrowing from the Social Security Trust Fund and we have the Trust Fund having to resort to using government funds that were not dedicated to the Trust Fund – this is where I get lost because it sounds like that old adage “robbing Peter to pay Paul”. Is the government lowering payments to recipients to save Social Security or to lower its debt? My mind gets wrapped up in this stuff like it’s an intricate pretzel. I hope someone will eventually explain the numbers in terms I can understand. In the meantime I will have to rely on more subjective statements.
An article in on Syracuse.com recently made the following statements:
The data show that the growth of the debt in the last three decades certainly has been a bipartisan enterprise, with only Clinton reducing the debt as a percentage of the U. S. economy.
Moreover, an increasingly large portion of the debt is money that the government owes to itself because of borrowing from large entitlement programs such as Social Security and Medicare. That’s because the money spent on discretionary programs has generally declined, as a share of economy, while spending on mandatory programs has soared – and will only consume a larger share of the economy as the Baby Boom generation heads into retirement.
In fact, the debt owed to entitlement programs is now almost as large a share of the economy as all U. S. debt before Ronald Reagan became president.
By the numbers, some restraint on growth of entitlement will be needed in order to control the growth of the national debt.
This I understand. This does not “pretzel” my brain. So why do I still feel like the American people have been “shafted”.
Every time the President asks Congress to raise taxes on the wealthiest Americans, John Boehner says no, offers up some of the deductions that currently lower taxes for wealthier Americans, and then drops the “entitlements” bomb. Not only will he not give the President what he wants but he demands that the President sweeten the non-deal with cuts to “entitlements”. Is John Boehner high? Has he been to that other Washington, the state, recently? Americans understand that we do not need to cut “entitlements” before December 31st. Cuts to “entitlements” do not have to be a part of fiscal cliff negotiations. The Republicans are just addicted to fear-mongering. They want the American people to blink first. Even if entitlements must be reformed, which a healthy economy might render unnecessary, we can wait until next year to do it.
Congress must stop believing that raising the age when “entitlements” become available is the answer to reform. This is just a quick and dirty approach which pays no attention to the realities of when people are actually “forced” to stop working. Unless employers find that they can keep older adults in the work force until they are 67, raising the age of eligibility for retirement benefits will create a coverage gap that will swallow up many hard-working people. The approaches that look at cutting costs and broadening the base of contributors along with means testing look much more promising.
Decide what to do about the Bush era tax cuts and raise the debt ceiling before the end of December. Finish the rest of this in the new year.