Congress Not Quite Ready For Proposed Social Security Reforms

“CONGRESS PUTTING OFF PROPOSED SOCIAL SECURITY REFORMS”, screams the headline on the business section of the newspaper I was reading.. Well, what’s new? Everyone knows that those politicians in Washington, D.C. couldn’t care less about its impact on the massive retirement and disability program that still faces long-term financial problems from an aging population and an economy that has been on a snail’s pace turnaround.
 
Congress has spent the past several weeks debating cuts in government spending through their contemptuous partisan battle over the issue of raising the government’s debt ceiling to $14.3 trillion. Most Republicans and some Democrats in Congress have said they won’t vote to increase the government’s ability to borrow without significant spending cuts. And, once again, the life of the Trust Funds that support Social Security and Medicare, the nation’s two biggest benefit programs, is being held hostage on Capitol Hill. The Democrats want to raise the debt ceiling while the Republicans are opposed to that move. The GOPs are saying that, if cuts are made to those unaffordable government spending being espoused by President Barack Obama and his Democratic allies, there will be no need to raise the debt ceiling.  
 
In an article I wrote dated May 2, 2011, I emphasized that fact that, “starting this year and each year thereafter, Social Security is paying more in benefits than it collects in taxes. This could mark the beginning of the end for one of the greatest pieces of legislation ever enacted by Congress during President Franklin Delano Roosevelt administration.”  
 
According to the nonpartisan Congressional Budget Office (CBO), last year’s $37 billion operating deficit——the first since the system was last overhauled in the 1980s——is expected to grow to $45 billion in 2011. Over the next decade, the program is projected to run up more than $500 billion in operating deficits if Congress doesn’t act.
 
President Obama and those Congressional lawmakers on Capitol Hill have seemingly forgotten that Social Security has built up a $2.6 trillion surplus over the past 30 years. They also seem to have forgotten that they were the ones raiding the Social Security funds, not currently being used to pay recipients’ benefits, to finance other government spending. The federal government had, for years, been using and abusing the Social Security’s assets as if there’s no tomorrow in funding those unaffordable and wasteful federal spending including those Congressional lawmakers’ pork barrels.
 
And how does the federal government collateralize their debt to the Social Security Trust Fund? It issues non-negotiable United States Treasury Bonds and U.S. securities backed “by the full faith and credit of the government.”  In short, the government owes the money, which is collateralized by non-negotiable U.S. Treasury Securities. The Trust Fund cannot resell these government bonds on the secondary bond market. These bonds can only be sold back to the government at face value. You don’t have to be a rocket scientist to know that said bonds are nothing but useless junks “being guaranteed” by the most heavily-indebted nation in the world——the United States of America.  
  
Advocates for Social Security want Congress to pay the trillion dollars in cash that the federal government owed the Social Security Trust Fund that it used to finance those unaffordable and wasteful federal spending and those Congressional lawmakers’ pork barrels. The Social Security did not cause the nation’s fiscal problems. For the past 30 years, the Social Security has been generating big surpluses to finance the federal government’s spending spree.
 
The federal government has been running up big budget deficits, including a record $1.5 trillion deficit this year. The national debt now tops $14 trillion, including the $2.6 trillion owed to Social Security. The Social Security’s financial shortfall is being exacerbated by the economic downturn. Payroll taxes that finance the program are down and applications for benefits are rising because of the high rate of unemployment. The growing number of baby boomers are starting to retire and applying for benefits and, thus, putting further strain on the system’s precarious financial position. 
   
According to the trustees who oversee Social Security and Medicare programs, Medicare is in worse shape than Social Security because it is also being hit by rising health care costs. But both programs will become insolvent in the coming decades, unless Congress acts.
 
Last year, the trustees reported that the Medicare Trust Fund would be exhausted by 2029 and the Social Security Trust Fund would run out of money by 2037. And with high rate of unemployment and lagging tax receipts, don’t expect the projections to get any better.
 
Both Democrats and Republicans agree that Medicare must be addressed soon, but the consensus ends there. Ends there? This, my fellow Americans, is the best those “fat cats” in Washington, D.C. can do. A classic case of wasteful spending of taxpayers’ dollars by and for those so-called “public servants.”