As reported in the New York Times
, President Bush said on April 5,
"You see, a lot of people in America think there's a trust, in this sense: that we take your money through payroll taxes and then we hold it for you, and then when you retire, we give it back to you," Mr. Bush said. "But that's not the way it works."
"There is no 'trust fund,' just I.O.U.'s that I saw firsthand, that future generations will pay - will pay for either in higher taxes or reduced benefits or cuts to other critical government programs," Mr. Bush said.
Sigh. The US is currently, under the leadership of a certain G.W. Bush, spending $400 billion or so more per year than it is taking in. The difference will
be paid for by future generations of Americans, either in the form of higher taxes, or in the form of inflation (or more seriously, bankruptcy). Social Security is irrelevant
to this fact.
Where the Social Security trust fund comes in is the issue of who
is financing all this deficit spending. Currently, a big chunk of the deficit is being financed by the Social Security surplus, which means that Uncle Sam is getting a loan from US wage earners. If there were no Social Security trust fund, then the US would have to make up the money some other way, such as borrowing more from foreign investors.
What that means is that in the future, when we must start paying for the fiscal recklessness of the Bush years, the repayment money will go towards Social Security benefits, instead of paying off foreign investors.
So how in the world is this an argument against Social Security in its current form? How is it an argument that Social Security is in crisis? It's not---it's just demagoguery.
Suggesting that the "IOUs" are worthless paper is no different from suggesting that US Savings bonds are worthless paper. Considering that the US is only staying afloat, financially, by selling those things, it is completely irresponsible for Bush to say that they are worthless. If
they are worthless, it is because the US has become, under the leadership of GW Bush, unwilling or unable to meet its financial obligations. If Bush is right about the worthlessness of the Social Security trust fund, it is because he
has trashed the reputation of the US, and made us into an unacceptable credit risk.
Yes, Social Security is in crisis in the sense in which the US as a whole is crisis until we elect more responsible leaders.
Permalink 8:31 AM