by Tina Grazier
Jim Lehrer asked the candidates to address Social Security in the debate Tuesday night. In response President Obama declared the Social Security program to be “structurally sound”. This statement goes against the findings of economists that have been warning of the need for reform for several decades. Did the President lie, or is he expressing his opinion based on his ideals and intentions?
I think President Obama believes in big government solutions. I believe he places the needs of government above the needs of individuals because he believes the government is the people. I think he believes that any money the people have earned is governments to take if the it is needed to save a program and that is why the President could say with a straight face, “Social Security is structurally sound … the basic structure is sound.”
According to CATO candidate Obama proposed making entitlement reform a “central part” of his attempt to control spending in the 2008 election. He said these were programs that need to be changed. But his “plan” was increasing payroll tax on the rich which, according to CATO would not be effective. CATO seemed to have hope for Obama’s chances to reform Social Security. Like most of the rest of America the guys at CATO may have put too much faith in the man who promised hope and change.
The fate of the social security plan has been known for decades. But the one thing that wasn’t anticipated back in the 1980’s was the string of recessions ahead or the housing and lending debacle that was cooked into the system and would wipe out the savings of baby boomers approaching retirement. Add to that the election of Barack Obama whose policies have caused the recovery to be unrelentingly slow causing Boomers to apply early for social Security benefits as they lost jobs and could find no work. Social Security reform has become even more pressing.
The situation we face today is reported in an article at Investors.com:
Social Security is now in its second year of paying out more in benefits than it is taking in in payroll tax revenues. Outlays for fiscal 2012, which ended Sept. 30, were $773 billion. The result was a deficit of about $53 billion, which follows 2011’s $45 billion deficit.
The deficits, which came years earlier than the government had projected, are not temporary setbacks. Social Security will be paying out more than it takes in for as far as analysts can see, and the gap only gets wider throughout time.
In less than 25 years, outlays will be 6.19% of GDP (nearly 5% now) while revenues will be 5.06%. By 2086, according to the Congressional Budget Office, outlays will be 6.63% of GDP while receipts will lag at 5.19%.
Just to make it through the next decade, Social Security will have to borrow $500 billion. In the long run, it has $8.6 trillion in unfunded obligations.
A Gallup Poll from 2011 found that most Americans were acutely aware of the problem:
PRINCETON, NJ — Two out of three Americans (67%) believe Social Security and Medicare costs are already creating a crisis for the federal government (34%) or will do so within 10 years (33%). The vast majority believe the programs will create a crisis at some point, with 7% believing the programs’ costs will not create a crisis for the foreseeable future.
This poll indicates wide support for reform of some kind to fix the SS problems. The devil, as they say, is in the politics and the details.
The President and most members of his party would simply raise payroll taxes. They would begin by increasing rates on those making over $200,000 but, as taxing the rich won’t solve inherent problem, rates would eventually be raised on all working people to pay for aging citizens. Even this approach is doomed to fail given what government has always done with social security revenues in the past:
Remember the 1983 payroll tax hike? It has generated more than $2.5 trillion that is supposed to be in the SS trust fund. Unfortunately, non of the surplus revenue was saved or invested in anything. It was spent on wars and government programs without making any provisions for repaying the money to the SS trust fund.
The bottom line is, the government has made too many mistakes in managing the SS fund for it to survive.
There are better ways to approach reform. Paul Ryan introduced a common sense plan and was immediately vilified by those who can’t think of any solution other than to make younger people pay more over their lifetimes. But the taxing solution is no solution at all; it is a recipe for oppression of future generations. It is a plan to give a brand new credit card to irresponsible Congressional spenders. It is a plan to save the program on credit that will crush the US economy.
The Heritage Foundation suggests a plan for reform that should be considered by our lawmakers:
Social Security is already operating in the red and faces a long-term deficit of $7.7 trillion. Currently, workers who can’t save enough for retirement must depend on Social Security, but with no guarantee they won’t still sink into poverty. The Heritage flat-benefit plan ensures that Social Security will keep all retirees out of poverty.
I’m sure there are other ideas that could be considered. One way or another this nation needs better leadership and common sense solutions for the entitlement mistakes of the last decade.
Did the president lie when he said Social Security was “fundamentally sound”? It depends on one’s perspective and core beliefs.
I won’t call the President a liar; I will say that his approach was given a change over the last century in America and it has led to massive debt, insufficient funds, burdens place on future generations, and missed opportunities to amass familial wealth for the millions of working Americans who put their faith in government. I will say that the President’s core beliefs do not resemble anything that I see as a basic American principle. His core beliefs more closely resemble the ideals of the Marxists and socialists that influenced European nations and created repressive regimes all across the globe. I would also say that his assessment of the Social Security program, that it is “fundamentally sound”, is a joke disputed by history and the facts.