Ignoring crises do not make them any less critical

The White House spent last week celebrating the $2.7 trillion, two-year budget deal, boosting military and domestic spending by $320 billion. The long touted “sequester,” for which Republicans repeatedly threatened government shutdowns since 2010, was dismissed as if it never occurred. In fact, the budget sits now at exactly the spending limits that President Obama recommended a decade ago, despite GOP histrionics in the interim.

Not only will the federal debt approach the threshold of 100 percent of the nation’s gross domestic product, thanks to this deal, the budgetary imbalance happens as the Social Security program itself commences to run deficits in 2020.

Moreover, absent a fix in the entitlement retirement program, current law requires a potential 27 percent cut in Social Security benefits to our neediest elderly — quite soon. In other words, Social Security effectively begins going broke next year; Trump’s budget does nothing about it; and the problem quickly becomes catastrophic. To be fair, there are hardly any prominent Democrats on Capitol Hill serious about saving SSA either.

Forget the promises of old. No “money” remains in the trust fund as first “Baby Boomers” reach retirement age. The Social Security Trust Fund was really only an accounting mechanism. Despite earning $1.367 trillion more than was paid out in SSA benefits, the federal government spent the extra Social Security tax collections just like any other incoming tax revenue. There was never any investment fund. The so-called “special-issue Treasury bonds” issued to justify the theft constitute little more than an accounting fiction – just IOUs committing the federal government to $1.5 trillion in deficits over the next 15 years. Then, at the end of all that extra debt, the present statutory code mandates cuts to the average SSA check by almost 27 percent by 2035.

Put another way, the sacred intergenerational trust of Social Security will end under our current law, right after a decade of historic deficits endangering our children’s children financial welfare, if we do not act to reform the program in the next two years.

While Trump and his minions have no wish to anger current retiree voters with reforms, the Democratic solvency answer, to lift the caps on current Social Security taxes, solves only part of the fiscal problem.

Presidential candidate Andrew Yang and others claim that making the rich pay more in FICA taxes stands as the sole answer for solvency. (The SSA withholding tax caps at just under $128,000.) Their math ignores, however, no money remains in the SSA Trust fund. So, promises that 88 percent of the SSA deficit will be closed by making the rich pay 12.4 percent of their entire wages prove highly inaccurate. The problem is just too big – and too immediate. Extra revenues are indeed necessary, despite GOP claims to the contrary, yet higher contributions from the rich only erase about 40 percent of the SSA funding problem.

That could be part of the solution. But it is not the overall answer. If we’re being honest – not political – real structural reform looks entirely essential when only two workers exist to supply each Social Security recipient, rather than the seven who paid into the system when the program was envisioned in the 1930s. That includes some politically painful choices on either raising the retirement age or adjusting down the CPI increase. These are proposals that Republicans under Trump have abandoned, and Democrats stand uninterested in exploring – any more than either side has any desire for new consumption taxes or instituting any of the other fiscal solutions which could save Social Security without major reductions in monthly checks.

Why should they? SSA payments get cut by a quarter a mere 15 YEARS IN THE FUTURE? What politician cares about bad news that comes after they leave office? Somebody else can just tell our fathers and mothers to live on 27 percent less in every check.

And, just rack up debt in the meantime! It’s not their problem if our children spend the next century paying higher interest rates on their mortgages and college loans because they found it easier to run deficits like Venezuela than engage in hard conversations in the interim. But then again, Donald Trump has always liked debt – especially when somebody else has to pay the price after he has left the stage.

This article originally published in the July 29, 2019 print edition of The Louisiana Weekly newspaper.