The leading Democratic candidates, most prominently Barack Obama, are discussing their plans for “fixing” Social Security. Obama accuses other candidates of, “…ducking the issue. Because conventional thinking in Washington says that Social Security is the third rail of American politics. It says you should hedge, and dodge, and spin, but at all costs, don’t answer.”
This is a bad sign. While Obama’s general idea is OK (raising taxes and preserving benefits), his pledge to “save” Social Security plays into one of the Bush administration big lies, that Social Security is facing a “crisis” in the first place.
The right-wing argument goes like this: Social Security is expected to start paying out more money than it takes in through payroll taxes in 2017. At that point, Social Security will have to start using the money it has been investing in its trust fund during all those years when it was running surpluses. But, *gasp*, the fund’s resources will be all gone because big-spending liberal congressmen used those payroll taxes to buy pink Cadillacs for welfare queens.
It sounds scary, but it’s actually pure baloney. For now, and for a good while to come, Social Security is actually paying for itself. It takes in more money than it pays out and it invests that extra money in U.S. Treasury bonds. There will come a point when payroll taxes don’t cover all the programs payments that’s when it starts cashing in on those bonds, which are backed by the full faith and credit of the U.S. Government.*
Basically, Social Security is funded through a very well-designed system that will run without any changes or adjustments into the mid-twenty-first century and perhaps beyond. This is in contrast to the Federal Government as a whole, which is running deficits today (not that we should be hardass deficit hawks). If payroll taxes were slightly increased, Social Security would basically last forever.
One of the few progressive victories of recent years (albeit a defensive one) was the foiling of Bush’s scheme to privatize Social Security. Now is not a good time to reopen the Social Security “debate.”
* The conservative talking point is that these bonds are worthless “IOUs.” This would come as a great surprise to the banks, foreign governments and zillionaires who regularly invest in U.S. securities. If right-wingers are really worried that the government is going to “go broke” they should reconsider their support for the Iraq war, Bush’s tax cuts, etc.