Wednesday, September 29, 2010

Folkbum on Social Security

Steve Kagen was recently promoted to "Pants on Fire" status for his attack ad on Reid Ribble over Ribble's stance on Social Security. Erstwhile liberal Wisconsin blogger Folkbum uses the occasion not to defend Kagen, but rather to further his one man crusade against what he calls the "zombie lie" that Social Security is going bankrupt.

The problem is, Folkbum's entire argument only works if you treat Social Security in isolation from the rest of the federal budget. As if the SSA would still be mailing checks regardless of whether or not the U.S. Government itself remains solvent. Is this really the right way to consider Social Security?

Here is what the Congressional Budget Office has to say about the future of entitlement spending, including Social Security:
All told, CBO projects, the aging of the population and the rising cost of health care will cause spending on the major mandatory health care programs and Social Security to grow from roughly 10 percent of GDP today to about 16 percent of GDP 25 years from now if current laws are not changed. (By comparison, spending on all of the federal government's programs and activities, excluding interest payments on debt, has averaged 18.5 percent of GDP over the past 40 years.) To put U.S. fiscal policy on a sustainable path, lawmakers would have to substantially reduce the growth in outlays for those programs relative to the amounts that CBO is projecting--or else match that growth with equivalent declines in other federal spending, corresponding increases in federal revenues, or some combination of the two.
So in other words, spending on just the mandatory entitlements will grow so large that all other government spending would have to be reduced to 2.5% of GDP just to match the average level of spending over the last forty years.

Of course, the major factor driving this increase is Medicare, but Social Security is definitely part of the overall picture. Considering it separately lets everyone feel better about Social Security sure, but ignores the larger context where Social Security resides. It's like only looking at a healthy limb on a tree whose trunk has begun to show signs of rot. Does anyone really believe the checks would continue uninterrupted if the U.S. faced a major fiscal crisis?

It may be imprecise to say Social Security will bankrupt us. It is certainly correct to say that mandatory entitlement spending by the federal government, of which Social Security is a large part, represents a major challenge to the continued fiscal soundness of the United States government. Furthermore, addressing this challenge will take a lot more than tinkering with a few tax rates or eliminating waste, fraud, and abuse. Even the muted language of the CBO conveys that there aren't any easy answers.

Far from driving a stake through the heart of a "zombie lie," pretending Social Security isn't really related to the larger budget does little but delay the day when we have a serious conversation about entitlement reform.

Even though Folkbum was a blogger whose endorsement Steve Kagen sought out in 2006 he never does get around to defending Kagen's attack ad, probably because it's indefensible. Despite his somewhat creepy fondness for the word "tea-bagger" I generally like Folkbum's blog, but this is one case where the reader would be well advised to pay no attention to the man behind the guitar.

1 comment:

Anonymous said...

Last I heard, last week in fact, the government is saying that we are already at the point of spending more than taking in starting in October some time for Social Security. All Social Security surplus funds over the years have been spent by Congress. There is no money in the "lockbox". Just IOU's! Only problem with that is the government has no money to back up tghe IOU's. So, they'll have to start borrowing more money from China, et al, to pay seniors. With the SS oayments goiing nup each year because of more seniors, how long can that last?