When running for president in 2000, and early in his first term in the White House, George W. Bush praised Social Security and stressed that surplus payroll tax revenues flowing into the program must be devoted to paying future benefits.
On May 15, 2000, while campaigning in Rancho Cucamonga, Calif., Bush called Social Security “the single most successful government program in American history.”
In that same speech, he declared that surplus Social Security monies, as embodied by the program’s trust fund, “must stay where they belong – dedicated to Social Security.”
In early 2001, when naming a bipartisan Social Security reform commission, Bush insisted that Social Security tax surpluses must be used “only for Social Security.”
In early 2002, Bush declared on the White House Web site: “We’re going to keep the promise of Social Security and keep the government from raiding the Social Security surplus.”
Of course, Bush and many members of Congress – both Republicans and Democrats – long ago broke campaign promises they made in the election year of 2000 to keep their mitts off surplus Social Security tax revenues. They instead have used the surplus taxes to help pay for a maze of government spending, ranging from pork-barrel projects to an unexpectedly difficult and expensive war in Iraq.
Now some Republican members of Congress are promoting a sham proposal to take surplus Social Security payroll tax revenues and divert the money into personal retirement accounts similar to those that Bush has touted in his inept, ill-conceived and unpopular campaign to “reform” Social Security.
The new proposal by GOP lawmakers would increase federal budget deficits and do nothing to ensure the long-term solvency of Social Security.
Meanwhile, Bush – in marked contrast to his comments in 2000 and 2001 – has gone out of his way this year to belittle the Social Security trust fund and the commitment that it represents to many millions of future Social Security beneficiaries.
At one point, Bush even declared that “there is no trust fund.” Whether he meant to or not, he intimated that the IOUs held by the trust fund couldn’t be counted on to help ensure payment of future Social Security benefits in 2017 and beyond, when incoming payroll taxes are projected to be insufficient to fully cover costs.
Bush’s attempt to trivialize the trust fund is disingenuous and irresponsible.
In the wake of Social Security reform legislation adopted in 1983, payroll taxes generally have exceeded the cost of paying benefits.
The surplus taxes have been diverted to paying for other government expenditures. Therefore, it’s true that there’s no pot of unencumbered cash in the trust fund that’s available to make up for future funding shortfalls projected for the program.
But when the federal government uses surplus Social Security taxes for other government expenditures, it issues special Treasury bonds to Social Security, which earns substantial interest on the bonds.
In future years, when Social Security tax revenues no longer generate surpluses, the bonds can be redeemed and the money used to cover any gap in benefit payments.
As it looks now, the federal government will have to either raise taxes, cut spending, borrow more money or do a combination of those things when the bonds are redeemed to pay the debt that the federal government owes Social Security for diverting surplus payroll taxes from it.
The bonds, held by the Bureau of Public Debt in Parkersburg, W.Va., totaled about $1.7 trillion at the beginning of this year. The amount owed to the Social Security program is expected to balloon before it starts running a deficit 12 years from now.
Thanks to the trust fund, Social Security is projected by the program’s trustees to have sufficient revenues to pay full benefits until 2041, even if nothing is done before then to shore up the program financially. The Congressional Budget Office has estimated that the shortfall won’t occur until 2052.
There is some argument as to whether a firm legal obligation exists to repay the Social Security program for the surplus taxes hijacked for other government expenditures.
But even if there were no legal burden, there’s a rock-solid moral obligation to millions of Americans who have faithfully paid Social Security taxes with the understanding that they would be devoted to what Bush five years ago called “the single most successful government program in American history.”
The U.S. government, for 200-plus years, has consistently paid its debts. It must continue to do so – and that requires repaying the money taken from Social Security.
Jack Z. Smith is a columnist for the Fort Worth Star-Telegram.
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