The great emblematic moment of a debate filled with demagogic sloganeering and stupidity came when Mr. Tea Party, Rick Santelli, asked about the Social Security “deficit”—that is, the fact that in 2011 Social Security is paying out more in benefits than it’s collecting in revenue. This “issue” is a pretty pure encapsulation of three pestilential problems: Republican scare-mongering; media stupidity in the face of it; and, and, and, uh ... let’s see ... I’ll think of it ...
But seriously. Here’s the situation. The Social Security law says that the Social Security Administration is supposed to pay out benefits from the taxes it collects. But on top of that, the SSA has a trust fund. Right now it’s $2.6 trillion. It’s in the form of government bonds, and so, when payroll taxes collected don’t cover the cost of benefits, the SSA draws on the interest of the government bonds it holds. This is exactly what the law says is supposed to happen. It’s not a crisis of any kind. It’s how the system was designed in planning for economic downturns, when unemployment is high and the collection of payroll taxes falls. When the economy picks back up, it’ll be back in the black.
Now it is true that the Obama administration and Congress agreed to decrease payroll taxes for employees from 6.2 percent to 4.2 percent, and that has contributed to this situation. But the bad economy is the larger contributing factor. To the extent that the payroll tax reduction is a problem, well, raise the tax back up to 6.2, which it’s been since 1984 and which Ronald Reagan agreed was a proper rate. But these candidates (at least the ones who were asked) said there’s no way they’d do that.
It sounds so scary to say “Social Security is paying out more in benefits than it takes in in taxes!” It helps right wingers sell the idea that government programs are unsustainable. But in reality, it isn’t any scarier than us dipping into our savings accounts when we encounter an unexpected expense. That’s what they’re there for. The more I watch these people, the more I think Obama is one lucky fella.