Social Security Reform – Let It Begin By Putting It Out of the Reach of Congress

Posted on November 12, 2010

Looks like the Congressional Democrats have hit the post-election ground running and are again trying to frame deficit discussions in terms of Social Security, trying desperately to put the Republicans in a bad position.

A draft proposal from the co-chairman of President Obama’s fiscal commission this week put Social Security on the front burner, leading some Democrats to draw a line in the sand. The proposal would raise the retirement age, slightly reduce benefits and raise the cap on income subject to payroll taxes.

While the proposal was drawn up to keep Social Security solvent and not to deal specifically with reducing the nation’s record deficit, Democratic strategists say it will be difficult for Republicans to duck an issue that has caused them political pain in the past.

“It does put them in a tough position,” Mike Lux, a strategist who works with liberal advocacy groups, said of the GOP. “These kinds of proposals, raising the retirement age and cutting benefits, are overwhelmingly unpopular with the American people.” [The Hill]

When Social Security was first created back in FDR’s time, it has its own account.  Currently it is under Congressional control.

There are a lot of people who, to save the system, would not mind a retirement age increase of a year or two, another year without a benefit’s rise or, if earning over $250,000, to receive a lesser amount in income benefits if it would save the overall system.

However, there will be no convincing Americans that they should sacrifice anything until Social Security again has its own account to reduce the possibility that the funds could be raided to provide for another government-run program.

Readers mad at Congress over Social Security shortfall

Update: Here’s a link to Social Security’s trust fund holdings from the Social Security Administration.

My column today covers some of the hundreds of suggestions by readers to fix Social Security. One gripe cropped up frequently.

Readers accused the government of “raiding” Social Security trust funds, and wondered if there would even be a deficit if the money had been left untouched.

Barry’s complaint via e-mail is a common one:

“As you know when President Roosevelt created Social Security he put it into an account all by itself. It was meant to be for the people and used for any other purpose. When President Nixon found out that the Social Security account had many millions of dollars in it he wanted to put his hands on it. And he somehow convinced Congress to remove it from its own account and put it into the general fund.

With it being in the general fund the Congress can use these funds anyway they wish. Now you want to know how to save Social Security?? Well the solution is very simple PUT IT BACK INTO ITS OWN ACCOUNT AND SET IT UP SO THAT CONGRESS CANNOT TOUCH THE PROCEEDS FOR THEIR USE. Now does this not seem like a suitable solution to the problem? Tell them to keep their cotton picking hands out of the till and leave the money for the citizens the contributed to the program.”

Social Security’s surplus is invested in U.S. Treasuries, and the government uses the money for other purposes while promising to repay it with interest. This promise is included in Social Security calculations, so the projected deficit remains the same, according to Frank Todisco, a senior pension fellow with the American Academy of Actuaries. In other words, even if all that Social Security surplus was left in a vault, we’d still be running a projected deficit.

Of course, some of you might argue that the government will renege on those bonds someday. But that’s a different argument.

Another myth worth busting: Many readers claim Congress doesn’t care about Social Security because its members aren’t part of it. Since 1983, new federal employees — including members of Congress — are part of the Social Security system. Sen. John McCain collects Social Security benefits.  [Baltimore Sun]

A note to President Obama  – enough deficit reduction commissions, etc.  Where is the commission focusing on job creation?.  Land the plane, go to the office and make some decisions.  You and your henchmen are happy to reduce everyone’s benefits except your own; everyone’s income except your own.

Posted in: CONGRESS