Note to White House budget director Jacob Lew: when you open a newspaper op-ed by using the phrase “win the future” in a a non-ironic way, you forfeit your right to be taken seriously as a fiscal analyst.
In a “no Social Security problem to see here” piece for USA Today, Lew writes:
The budget put forward by President Obama last week is a blueprint for how we can live within our means and win the future. As this begins the budgeting process in Washington, we need to be clear about the causes of the pressing fiscal problems we face. Specifically, looking to the next two decades, Social Security does not cause our deficits.
Social Security benefits are entirely self-financing. They are paid for with payroll taxes collected from workers and their employers throughout their careers. These taxes are placed in a trust fund dedicated to paying benefits owed to current and future beneficiaries.
Looking beyond Lew’s buffoonish attempt to make the “WTF” phrase happen, the rest of the argument falls short on several levels. For one, it’s silly to talk in terms of Social Security not causing our deficits. In any budget that’s running a deficit, any money that is spent is part of what’s contributing to the deficit. This is especially true in the case of Social Security, which will be the biggest component of government spending over the next decade. From 2012 through 2021, the U.S. is projected to spend $9.9 trillion on the program, according to the Congressional Budget Office, representing more than one out of every five dollars spent by the federal government over that period. That’s $2 trillion more than will be spent on defense. To say that this won’t be put pressure on our deficit is absurd on its face.
What’s more absurd is Lew’s insistence on talking about the Social Security trust fund. The Social Security program is financed primarily by payroll taxes. When the amount of tax revenue collected exceeds benefits, the surplus is theoretically put in the trust fund. But in reality, the federal government uses that surplus to finance ongoing government operations, and puts a stack of bonds — or IOUs — in the funds instead. So, while it’s true that for the next few decades, there’s theoretically enough money within the system to keep paying beneficiaries, the program is currently running a deficit when we acknlowlege that ultimately everything comes from the same bank account. Specifically, in a report last month, the CBO wrote that, “surpluses for Social Security become deficits of $45 billion in 2011 and $547 billion over the 2012 to 2021 period.” To meet its obligations to beneficiaries, either the government will have to raise taxes, cut other government services, or issue more debt — either way it’s contributing to our budgetary problems.
Way back in 2007, candidate Obama drew the ire of progressives when he dared to refer to the “Social Security crisis.” In their world, the program is in splendid shape, and they spent most of last year raising alarms over the Obama fiscal commission, which they saw as a pretext for gutting Social Security. But Obama clearly got the message — in his State of the Union, he rejected any real reforms to the program and ignored the problem in his budget. Now his administration is setting the stage for a battle with Republicans should they propose any changes to the program, by echoing progressive denialism.