by Rob Roper
As the debate in Washington over the debt ceiling became more pointed, President Barack Obama responded to a question about Social Security checks, “I cannot guarantee that those checks go out on August 3rd if we haven’t resolved this issue. Because there may simply not be the money in the coffers to do it.”
This no doubt sent heart palpitations through the chests of senior citizens throughout the nation, and was no doubt calculated to do exactly that. But, is it true?
On July 12, Vermont Senator Bernie Sanders posted on his website, “The president understands that Social Security hasn’t contributed one nickel to our deficit. In fact, Social Security has a $2.6 trillion surplus today, can pay out every benefit owed to every eligible American for the next 25 years. Social Security is funded by the payroll tax, not by the U.S. Treasury.”
This is a line of argument Sanders has been using for a long time as a cudgel against anyone who dares speak of reforming Social Security. Why would you want to change what isn’t broke?
Both Sanders’ and Obama’s statements cannot be true (though both could be false). If Sanders has been telling Vermonters the truth all these years, and Social Security and its trust fund are financially sound, the checks should be ready to roll on August 3rd and keep rolling through twenty-five more Augusts after that.
Sanders is correct in pointing out that Social Security is funded separately through the payroll tax. As such, all money collected for Social Security should be available to pay beneficiaries (although in 2010, the program started taking in less money than it is supposed to pay out).
Sanders’ office stated, “Even in the case of a default, there is money. There’s no reason Social Security should be involved in this debate.” They did not have a clear understanding of why the president was making this line of argument, but could only speculate that the president is trying to bring a “sense of importance about the issue.”
But – and here is where Senator Sanders argument runs into trouble – the president’s statement begs us to scrutinize Sander’s claim that there is $2.6 trillion in the trust fund, available for future payment to seniors. If what the president says is true, and we are dependent upon borrowing money to fund current Social Security obligations, that is an admission that there is, in actuality, nothing in the Trust Fund.
Perhaps the president’s blatant attempt to scare senior citizens will do some good in waking them up to the fact that under the status quo system, the government has robbed the Trust Fund and the future viability of the program of every nickel Senator Sanders says is in there, and spent it. They have replaced that real money with IOU’s that will either have to be paid back either through higher taxes or cuts in other areas of government spending.
Since taxpayers filled the Trust Fund once, they should not be called upon to do so twice, the second time, adding insult to injury, with interest.
The question for Bernie now is, will he come forward and assure senior citizens that Social Security is sound and not to worry about the misguided scare tactics of the president. Or, will he come forward and admit he has been very wrong about the security of that Social Security? Or, will he simply hope no one’s paying attention or willing to hold him accountable?