Congressional Budget Offices Says Social Security Runs a Surplus Till 2020

The cornerstone of the second Bush administration’s domestic policy is Social Security change. Insisting that the system is “on the road to bankruptcy,” the president wants to change the law to permit some of the payroll tax younger workers pay into the system to be diverted to Wall Street portfolios. And there is no denying that as America gets greyer, the system will face financial stress. But the Congressional Budget Office, one of a few unbiased sources left in Washington, just released data showing the system will run a surplus until 2020. So the question is, “what crisis?”

The Bush modus operandi is to instill fear without factual basis, declare a crisis, offer an ideological pleasing (to reactionaries) solution, and declare the opposition disloyal. This is why American troops went to Iraq despite the lack of weapons of mass destruction – not to make Iraq a democracy, no matter what the revisionists of the right say. It is the same with Social Security. It is a transfer of wealth to the elderly on the grounds that they are old, and that gets up the nose of the ideologues who run the GOP these days.

According to the CBO, more money will come into Social Security than goes out until 2020. That doesn’t mean in 2021 the system will be broke, and the checks begin to bounce. It merely means that the surplus that has been generated, and is currently considered to be in a trust fund, will start flowing out. The surplus will, at current rates, run out in 2052. At that point, Social Security still won’t be broke. According to the CBO, "After the trust funds are exhausted, Social Security spending cannot exceed annual revenues. As a consequence ... benefits paid will be 22 percent lower than the scheduled benefits." No need to change anything for almost 50 years, and, a reduction at that time of 22% posits no increase in payroll tax revenues. Again, what crisis?

It is legitimate to debate whether a “pay-as-you-go” pension system makes any sense (yes, so long as the population is growing and young). It is legitimate to debate whether the 2% return many younger workers will get could be improved by investment elsewhere (but Social Security is not an investment vehicle; it is insurance, which always pays less but is more secure). It is even legitimate to debate whether young Americans owe anything to older Americans in terms of old age pensions (yes, in exchange for free education and one’s own pension later). What is not legitimate is creating an atmosphere of fear, which is the enemy of reason.

Social Security should not be the only source of income for the elderly. As a nation, America needs to save more, invest more and eventually, live off the capital thus acquired after 40 or 50 years of labor – 401(k) and Keogh accounts come to mind. Ways to achieve that require education, changes in tax policy and employment rules, and a dose of political bravery. They do not require political fear, which is akin to political terror, which is what the nation is supposedly fighting against at the moment.

© Copyright 2005 by The Kensington Review, J. Myhre, Editor. No part of this publication may be reproduced without written consent.

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