“What we have here is a failure to communicate”: Politicians and Social Security

Why should Social Security require means testing to determine payments as suggested by New Jersey Governor, and potential 2016 Presidential candidate, Chris Christie? (http://time.com/3821012/chris-christie-social-security-medicare/)

The program was not established as a so called “entitlement program,” Republican code seemingly translating to a program that provides benefits to someone who did not pay for them.  Social Security follows a very specific formula: employees get annual statements from the agency that shows what benefits are to be received based upon mandatory payroll deductions and employer contributions.  (In the case of self-employment, the individual pays both).  These are not entitled benefits, they are earned and paid for and should not be subject to the political whims of potential presidential candidates vying for any attention 19 months before the next election.

What I find particular is a such an outspoken member who has viciously attacked the Democratic party spending on entitlement programs is suggesting that (1) Social Security is an entitlement program and (2) that there be a redistribution of that wealth through means testing.  How exactly should individuals who made contributions with the understanding that they would be returned under the program at a later time take this change to a contractual agreement with the United States Government?  Those monies are now forfeit?

The non-partisan Congressional Research Service, in publication RL33028, Social Security: The Trust Fund (https://www.fas.org/sgp/crs/misc/RL33028.pdf) talks about how the program is financed.  Of note is this except on page 15:

“The Social Security Trust Fund and the Level of Federal Debt

As part of the annual congressional budget process, the level of federal debt (the federal debt limit) is set for the budget by Congress. The federal debt limit includes debt held by the public as well as the internal debt of the U.S. government (i.e., debt held by government accounts).  Borrowing from the public and the investment of the Social Security trust fund in special U.S. government obligations both fall under the restrictions of the federal debt limit. This means that the Social Security trust fund balance has implications for the federal debt limit.

This talks about how monies are borrowed from the Social Security trust fund in the form of internal government debt obligations.  Perhaps to deal with the inevitable expansions and contraction of the population receiving their earned benefits, there will need to be an inflow into the program instead of borrowings from it–instead of broken promises in the form of changing the earned benefit payout.  Since its design as a pay-as-you-go program works successfully when more are paying into the program than receiving earned benefits; now that the baby boomer generation is retiring the funding realities are apparent.  The question is will politicians address this rationally and within the public trust granted to them by those who income was promised to be returned?  Will politicians ignore their responsibility, by deferring and not making tough decisions.  If they choose the latter, I think a conversation about the generous Congressman pension plans that fully vest after only two years need to be examined since they would be unearned.  Lets make this article’s Cool Hand Luke quote crystal clear: politicians will break the word of the US Government and the trust of the American people by reallocating earned benefits

Related Common Clarity articles:

A Social Contact’s Promises and What is Our Word Worth?

What is an “Entitlement Program?” – Part One Social Security

 

 

What is an “Entitlement Program?” – Part One Social Security

The term “entitlements” is being throw around to encompass a broad swath of federal spending.   So I have a few simple questions for politicians and urge you to ask and answer them as well:

• What are entitlements / entitlement programs?
• What specific programs are entitlements?
• Is Social Security considered an entitlement program?
• Is Medicare considered an entitlement program?
• Is unemployment compensation an entitlement program?

I am concerned that many people passionately voice opinions without  understanding the history or purpose of the programs.   Politicians making unconstructive inflammatory remarks are counterproductive to pragmatic solutions.  Learn more about the history of social security at:  https://www.socialsecurity.gov/history/

Social Security is essentially a government forced savings plan and is not “free” to the beneficiary. Individuals pay a specific percentage of income with the explicit promise of receiving a defined amount back based upon what is contributed.  The difference between what is put in and what is taken out is not “free” but rather a return on what is essentially a pension.  Congress’s misfeasance by “borrowing” from the Social Security Trust thus underfunding the pension liabilities is not a program flaw but rather a management one.

I urge you to review the history of Social Security above as a primer to this multiple part series.  We need to be educated and have this as an open conversation not one driven by fear or misinformation.  The more contentious the issue, the more we need to return to base truth.