Jewish World Review Sept. 5, 2001 / 16 Elul, 5761
This was recently evidenced - again - when the likes of Democratic National Committee Chairman Terry McAuliffe, Senate Majority Leader Tom Daschle and House Minority Leader Dick Gephardt and their compatriots pounced on President Bush for "raiding the Social Security trust fund."
This was the fallout after it was just announced by Washington bean counters that the fiscal 2001 budget surplus will be about $158 billion - only the second largest in history. The problem? Largely because of the economic slowdown, the surplus is not the almost $300 billion estimated for 2001 just four months ago. The surplus that does exist is mainly generated from excess receipts from Social Security (payroll) taxes, some $9 billion of which may have to be used to make federal ends meet with the remainder - for now - earmarked to pay down the national debt.
Here's the chicanery: There is no Social Security trust fund. Almost from the inception of the program, any excess from payroll taxes has been used for any and all federal spending, good and bad. When the government spends those receipts from payroll taxes, whether on more federal programs or even paying down the federal debt, it always does the same thing - the Treasury just writes an "IOU" to itself.
Democrats themselves oversaw this practice when they controlled Congress, which has been most of the time since the creation of Social Security, and they happily acquiesced in it when they didn't - so they well know there is no "trust fund" and that no "trust fund" is being raided.
But that doesn't keep them from being demagogues on the issue. "We told you the big budget surpluses would dissolve if President Bush got to waste it on his 'huge' tax cuts," they are saying. "Now look - he's raiding the Social Security trust fund to pay for them."
Interestingly, at the inception of the Social Security program, payroll taxes were saved in a separate federal account and allowed to accrue - a true trust fund - until the Democrats of that day quickly figured out that putting aside Social Security money would require the government to invest it, thus distorting financial markets. So, it was soon turned into a pay-as-you-go program.
Payroll tax receipts and outlays to current retirees were more or less at parity until the Greenspan Commission (chaired by Alan Greenspan in 1983) decided to increase payroll taxes far above what was needed for current Social Security payments in order to start "saving money" for future retirees.
No surprise here - the surplus funds from the higher payroll taxes were just spent on more government programs of all stripes, and the stack of IOUs grew. Still, none of this became much of an issue until a couple of years ago when huge federal surpluses unexpectedly started accruing and we began hearing about "protecting the (mythical) Social Security trust fund."
Enter the Democrats, and their clear and disingenuous suggestion that using billions of dollars from surplus Social Security receipts to fund current programs is a) a wholly new practice and b) it means your grandma might not get her Social Security check next month. These are lies, of course, but you can practically see these guys frothing at the mouth. They're thinking "hey, the hand recounts in Florida didn't work to bag us the presidency - but demagoging the Social Security issue is a take-it-to-the bank tactic."
Unfortunately, it's the Republicans who painted themselves into this corner by driving the bandwagon calling for a "lockbox" for Social Security, with the plan being to use excess Social Security receipts to pay down federal debt. Instead, of course, they should have argued that if there are any surplus funds in Washington it's because Americans paid too much in taxes and that money, all of it, should be refunded to them.
This is all the more true given that surplus federal funds, whatever their source, are routinely spent on new programs. Besides, the only way to truly pay off America's "debt," which has been dramatically falling as a percentage of our Gross Domestic Product anyway, would be to force people to accept a discounted payment for their savings bonds which have yet to mature.
Here, then, it comes down to a pathetic truth: The Democrats may be liars, but the Republicans are their