“Why doesn’t the government just repay the money that’s been borrowed from the Trust Fund?” is a question many of you are asking.
A recent op-ed piece by Senate Budget Committee Chairman Senator Judd Gregg (NH) suggests that the public is misinformed about the Social Security Trust Fund, and that the Trust Fund will soon begin to “gouge” $32 billion out of other parts of the budget. Senator Gregg said that federal budget problems would begin in 2011 when Social Security benefits exceed the taxes collected. He says that federal budget writers will have less “Social Security dollars to pad other spending, and the rest of the budget will begin to feel the pinch.”
We believe that Congress has used excess Social Security payroll taxes to “pad” other spending (or to offset massive tax cuts) long enough. Congress is considering making recent tax cuts permanent. Doing so would make it much more difficult to redeem the special government bonds (or IOUs) held by the Social Security Trust Fund. This increases the pressure to cut Social Security benefits or Cost-of-Living Adjustments. The Congressional Budget Office has estimated that the cost of making recent tax cuts permanent to be $1.8 trillion — the same amount that the government will owe to the Social Security Trust Fund by the end of this year.
The problem is not that the public is misinformed about the Trust Funds — but that our government is not handling the Social Security Trust Funds in the fiscally responsible manner taxpayers expect and deserve. TSCL surveys have continued to find over the years that seniors overwhelming believe Social Security taxes should be set aside into a real Trust Fund.
We encourage you to keep asking your Members of Congress how the government plans to repay the money that’s been borrowed from the Social Security Trust Fund. Legislation, H.R. 219, introduced by Congressman Ron Paul (TX) would require the deposit of surplus Social Security taxes into marketable U.S. interest bearing bonds (like U.S. Savings bonds) or certificates of deposit at banks insured by the Federal Deposit Insurance Corporation, and would protect such trust funds from the public debt. TSCL believes that without such protection, any so-called “fix” to Social Security would only last until the government ran short of cash again.
Sources: B-BIS-SBC030705 “The Looming Crisis: Budget Impact of Social Security Insolvency,” Senator Judd Gregg, March 7, 2005.
June 2005
