Hey, I don't usualy coment politics but I thought you may enjoy some lite reading.
The Unlocked Box
How Bush is plundering Social Security to close the deficit.
By Daniel Gross
Posted Friday, Jan. 9, 2004, at 10:51 AM PT
Feeding Social Security to the defict
The International Monetary Fund, which usually frets about runaway fiscal policies in developing countries, yesterday released a report that warned of the dangers to the global economy posed by the United States' lack of spending discipline, its reliance on foreign creditors, and its failure to plan adequately for future government liabilities.
Earlier this week, even as he called for making the Bush tax cuts permanent, Treasury Secretary John Snow pooh-poohed the deficit problem and insisted the government has a plan to improve matters:
Our fiscal situation remains a matter of concern. With major expenditures to protect our nation's homeland security and fight the war on terror, coupled with a recovering economy, we still face a deficit in the $500 billion range for the current fiscal yearˇlarger than anyone wants. But that size deficit, at roughly 4.5% of GDP (compared with a modern peak of 6% during the 80s), is not historically out of range; and it is entirely manageable, if we continue the president's strong pro-growth economic policies and sound fiscal restraint. Indeed, with adoption of the President's policies, our projections show a solid path toward cutting the deficit in half, toward a size that is below 2% of GDP, within the next five years.
The genial treasury secretary, a former deficit hawk, seems literally incapable of speaking truthfully about the deficit. (The same holds for National Economic Council Chairman Stephen Friedman.) In fact, if we adopt the president's policiesˇwhich include a host of new tax cuts and massive new spending programsˇthe deficit won't fall 50 percent in the next five years. It will grow substantially. And if President Bush and the Republican-controlled Congress weren't already quietly using every penny of the massive and growing Social Security surplus to cover operating expensesˇand planning to continue this habitˇthe deficits would be even larger.
Back in 1983, as part of a deal to save Social Security from impending demographic doom, Congress enacted legislation to essentially increase payroll taxes and reduce benefits. As a result, the government began to collect more Social Security payroll taxes than it paid out to beneficiaries each year. The theory was that the government would use these surpluses to pay down the national debt. That way, when baby boomers retireˇand comparatively more people are collecting benefits while comparatively fewer people are workingˇthe government would be in a better position to borrow the necessary funds to provide the promised benefits.
So much for theory. The reality? For the first 15 years, every penny of the surplus was spent, first by Republican presidents and then by a Democratic president. According to figures provided by the Committee for a Responsible Federal Budget, the surpluses were relatively insignificant for much of this period. Between 1983 and 2001 a total of $667 billion in excess Social Security payroll taxes was spentˇabout $35 billion per year. It was only in fiscal 1999 and 2000, when the government ran so-called on-budget surpluses, that excess Social Security funds were actually used to retire debt.
In the 2000 campaign, Vice President Al Gore said we should sequester the Social Security surpluses in a "lockbox" to prevent appropriators from spending them. Bush agreed in principle. But that commitment went out the window soon after the inauguration. In his first three budgets, Bush (who had the good fortune to take office at a time when the surpluses were growing rapidly) and Congress used $480 billion in excess Social Security payroll taxes to fund basic government operationsˇabout $160 billion per year!
By so doing, Washington spenders have masked the size of the deficit. For Fiscal 2004ˇwhich began in October 2003ˇif you factor out the $164 billion Social Security surplus, the on-budget deficit will be at least $639 billion, rather close to the modern peak of 6 percent of GDP. And according to its own projections (the bottom line of Table 8 represents the Social Security surplus), the administration plans to spend an additional $990 billion in such funds between now and 2008. That year, according to the Office of Management and Budget's projections, the on-budget deficit will be about $464 billion. Only by using that year's $238 billion Social Security surplus does the administration arrive at a total, unified deficit of $226 billion. And the ultimate on-budget deficit will almost certainly be worse. OMB has proven in the past few years that its projections can't be trusted.
The accounting for Social Security surpluses has always been dishonest. But in the past few years, the Bush administration has made this shady accounting a central pillar of its fiscal strategy. The unprecedented reliance on these funds hides the failure of the administration to ensure that there is some reasonable correlation between the resources it has at its disposal and the spending commitments it makes. Bush & Co. have redesigned the tax system so that collections of the progressive taxes that are supposed to fund government operationsˇlike individual income taxesˇhave plummeted. Instead, with each passing year we rely for our current needs more on the regressive payroll taxes that are supposed to fund our collective retirement.
The persistence of the administration and its credulous allies in eliding these facts is flabbergasting. Of course, for the Bush administration to give an honest accounting of the deficits, and of the role that Social Security surpluses play in keeping them down, would be to admit the fundamental bankruptcyˇno pun intendedˇof its adventuresome fiscal experiment.
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No room for anyone farther left the the far right on here. Even though what you say is true. LOL
I already know you rewrite history and your memories are short as some other attributes, but did you ever stop to think WHAT PARTY made the sham of Social Security in the first place? And what party made portions of it taxable? And what party added the extra fees to it in the first place. QUIT GROVELING for once in your sorry life and get your FACTS straight before you blame ONE sitting President for all the crap in the world. And while you're at it, WRITE YOUR DEMOCRATIC CONGRESSMAN and ask him exactly how much he PAYS INTO SOCIAL SECURITY. Can you even spell "ZERO"? By the way, checked any of the current polls on President Bush's popularity in America? Where does that leave YOU?
who use to be a staunch republican. He is a soft spoken man who doesn't inject his opinion very often, so when he does it is usually worth listening to. Well, as he puts it- if you put all the politicians in a bag (meaning republicans and democrats), shake the bag and pour them out, you wouldn't be able to tell one from another. I do believe that is an accurate statement. This uncle is still a conservative- just not so sure he is republican anymore. There just aren't very many conservative politicians any more.
And if you are counting on the government to take care of you- I would question the sensibility in that. By the way, George is correct- the social security surplus has been being spent for years. Lock box- yeh, right. Believe that one and I need to talk to you about some ocean front property in Indiana.
I said LITE reading. LOL Before you get your panties in a bunch; No one is disputing that Soci... I mean Democrats came up with the idea that they could take money from the people disguised as a "Government Run Retirement Policy for the American People" and then use that money on whatever they want. Much like the Republicans designed the "401K" program so millions of Hard Working Americans can invest huge sums of money into their corrupt businesses fronted by the stock market. And I don't think the article above is blaming your hero for ALL the crap in the world, but maybe pointing out that the top person that we (you & I & every American)have entrusted with OUR (yes you pay in too)retirement money should in fact use it for just that. But you are right, we can not blame one president for doing what we have allowed all the president's since the conception of SSI to do.
Hey, and you right on the nose regarding Congressmen (and Reps). They should have to pay in just like everyone else! They should NOT get to give themselves raises nor should they get a retirement after 4 years of service. Elected officials are SUPPOSE to work for the best interest of the American people that put them there. I guess it is the only job where once hired, you can do what ever you want regardless of what your boss (constituents) want, can give yourself raises and benefits even when you don"t deserve them, and there are virtually no consequences for your actions.
Hey George, I would love to carry this discussion on some more later. I enjoy hearing your thoughts and views on different matters.
Please concact me with info. on that ocean front property. Beings that I already live in Indiana, it shouldn't be a long move. Might be good for business too.(LOL) I won't even talk about Bush right now. I'm still pretty pissed about this idea of naturalizing illegals and giving them jobs Americans "don't want". What a crock. Throw em over the fense they climbed under.(illegals) Thats My 2 cents. Peace- Jeff F.
dont cuss the Mexicans to much with your mouth full!
They are doing jobs we Americans will not do, plus the fact they will work hard at doing it!
Funny thing is I dont see high school kids busting down the walls to get jobs.
Its our fault too.
Thanks to our wonderful unions..NOT! most of your union jobs are fading out or gone , the mexican people will work hard and are glad to have a job pay 10$ an hour, most union people wont get their lazy butts out of bed to support their families for that amount! yeah i had a union job, once! and never again!
Here in N.E. Indiana the average factory starts at or below $10 an hour. And there are PLENTY of people(LEGAL AMERICANS) who are willing to do these jobs. And as far as unions go, I know that scenerio quite well to. I was a chief union steward. What a headache! Won't work for another union shop. Certain securities are nice but job security is better. Truth- Jeff F.