Notch Reform Bulletin: Lockbox Essential for Social Security and Notch Reform

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Notch Reform Bulletin: Lockbox Essential for Social Security and Notch Reform

No private corporation could get away with treating its pension funds the way the government treats Social Security. Rather, like Enron, Congress borrows money from the Social Security Trust Fund, which is supposed to be used to pay future pensions—then spends the money on current operating costs! The promised benefits for future retirees amount to trillions in future costs. Yet you won’t find the amount that the U.S. government owes to the Trust Funds of Social Security or Medicare anywhere on the books as liabilities. David Walker, head of the U.S. General Accounting Office explains that “they’re really not a traditional trust fund, they’re really an accounting device.” (For more information on this subject, read “Is Our Government Guilty of Questionable Accounting?” at http://www.tscl.org/NewContent/101594.asp.)

To end this sham, and protect your future benefits, a Social Security and Medicare “lockbox law” remains critical. Just last year, Congress heatedly debated locking away the Social Security and Medicare surpluses and designating them ONLY to pay benefits (which would include Notch reform if passed), or to reduce debt. The war on terrorism, the recession, and last year’s tax cut caused a huge reversal in the federal budget. Instead of a surplus, the federal budget is now projected to have a $165 billion deficit for 2002.

Despite that deficit, the 2003 budget of about $759 billion represents a whopping 10% spending increase. For example, the budget includes a $5,000 a year pay raise for Members of Congress, who will receive $155,000 next year (except in the unlikely event that Congress votes down their own raise).

Without lockbox protection, Congress finds it all too easy to borrow the Social Security surplus to cover their spending excess. The budget deficit in turn causes financial pressure for such accounting gimmickry as Consumer Price Index (CPI) “revisions” or “improvements” that cut your Social Security COLA. Lockboxes, on the other hand, provide fiscal discipline and require that Congress make an honest choice between new spending and new tax cuts.

There is one thing and one thing alone that can change this tide. Seniors must unite and fight for what is right. The first step in this fight is taken with your vote! If you haven’t already registered, click here: http://www.tscl.org/NewContent/101344.asp The second is by supporting the various campaigns currently being conducted by your League.

Source: “Cooking the Books is an Old Recipe for Uncle Sam,” Jonathan Karl, “The Wall Street Journal”, July 22, 2002.

For another story about Congressional pay raises see “Why Don’t Seniors Get the Same COLA as Members of Congress?” at http://www.tscl.org/NewContent/101403.asp.

October 2002