Op-Ed: The Vanishing Promise

Op-Ed

The Vanishing Promise

House Majority Leader Steny Hoyer (D-Md.) said in July, "Our political system is built to encourage easy decisions. If the incentives are going to change, the voters have to be the ones to change them. So to those of us who understand the danger clearly: Let us explain the stakes. Let's make it clear to anyone who will listen that fiscal issues are moral issues, that the kind of lives our children will lead are at stake."

I commend Mr. Hoyer for helping to raise awareness of the federal government's serious budget problems, including the $43 trillion in unfunded liabilities under Social Security and Medicare. I share his view that fiscal issues are moral issues. I write this article -- to my Democrat colleagues and the American people -- to explain the stakes of a vanishing Social Security surplus.

As Mr. Hoyer points out, our political system favors easy decisions. Fixing Social Security will not be easy, nor has it always been easy to convince policymakers that there is a crisis in the first place. Past calls for reform have been conveniently dismissed as unnecessary responses to a manufactured crisis. Critics have blamed overly pessimistic economic assumptions and questioned whether reform was necessary to protect Social Security beneficiaries against an economic "rainy day."

That rainy day is here because of massive job losses, reduced Social Security payroll tax contributions, and a spike in early-retirement claims. Social Security has long taken in more money than it pays out in benefits, generating a cash surplus. But the non-partisan Congressional Budget Office now estimates that the program will run a combined $19 billion deficit in 2010 and 2011, with the surplus disappearing altogether by 2016.

These impending Social Security deficits will not immediately affect benefits, which will still be paid out from a so-called trust fund that exists only in a "bookkeeping sense." The entirety of this $2.5 trillion trust fund has been lent to the federal government for spending on other federal programs. The sooner we have to tap the trust fund and redeem those loans, the sooner our government will be forced to borrow or tax even more to support runaway government spending.

Budget jargon and accounting gimmicks aside, American families understand the plain and simple concept of balanced budgeting. You cannot call a program -- or a government, for that matter -- safe and sustainable if it pays out more than it takes in.

In addition to the economic reasons for the program's deterioration, Social Security is damned in the long term by sheer demographics. In 1935, there were 42 workers paying into the system for every Social Security-eligible retiree. Today, with baby boomers only beginning to retire, there are only three workers per retiree. The phantom trust fund will not last once baby boomers start retiring en masse.

In light of this and other stark economic realities that the Congress is ignoring, it seems ridiculous to haggle over a trillion-dollar expansion of big government in the name of healthcare reform that in and of itself is an unsustainable fiscal prospect. Healthcare should be reformed via a series of smaller pieces of legislation that can be debated over the course of 2009 and 2010. Meanwhile, our first and foremost priority should be getting our fiscal house in order and this cannot be done without reforming entitlements. The alternatives to reform -- European-style tax increases on every household, eliminating all federal programs outside of the entitlement budget, or unprecedented levels of government debt with untold economic consequences -- are not the America I want to leave my children and grandchildren.

Source