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  • Social Security is Adding to the Debt Now

    Sen. Harry Reid (D-NV) just doesn’t have a strong grasp of the facts when it comes to Social Security and the debt. Yesterday, at a campaign rally calling on Congress to “Back Off” Social Security Reid again repeated his line that: “Social Security has not contributed one penny to the debt or the deficit.” As FactCheck.org has certified, this is just plain false. The reality is that Social Security added $37 billion to the debt last year and will add another $45 billion to the debt today.

    Reid and the rest of his allies on the left are clinging to a myth about what is in the Social Security Trust Fund. The Trust Fund does exist. You can even travel to the sleepy little town of Parkersburg, West Virginia and visit all $2.5 trillion dollars of it. The problem is that the special issue U.S. Treasury bonds inside the nondescript office building where the Trust Fund is kept are not cash. As President Bill Clinton’s OMB noted back in 2000:

    These [Trust Fund] balances are available to finance future benefit payments and other trust fund expenditures-but only in a bookkeeping sense. These funds are not set up to be pension funds, like the funds of private pension plans. They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury, that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures. The existence of large trust fund balances, therefore, does not, by itself, make it easier for the government to pay benefits. (emphasis added)

    So when Harry Reid says that Social Security has not added a single penny to the federal deficit he is just dead wrong. And the longer Congress delays fixing Social Security, the more that program will add to the debt. Social Security must be reformed now.

    Posted in Economics [slideshow_deploy]

    20 Responses to Social Security is Adding to the Debt Now

    1. George Colgrove VA says:

      Congress needs to educate America about this cost item. There was a surplus of cash in SS a year or so ago, but as the feds lied about the solvency of this program last year and early this year, we are now seeing that SS has been adding to teh National Debt. You are right, Conn, if this is not stopped the SS deficit will start to grow fast. You add in the fact MC/MC is also not fully funded, the programs run by the DHHS will be the largest responsible party for the demise of this country with the DoD coming in second. THis year the estimated grab for cash from the taxpayers for the "Social Insurance" programs is estimated to be over $800 billion. The expendatures for SS, MC/MC and some welfare programs top out at $2.1 trillion!

      This means one of two things, SS and MC/MC taxes need to go up – way up! Or the costs of these programs need to go down. Which will it be?

    2. Sean Bailey says:

      So when the Chinese redeem a treasury bond, it's okay to make good on the full faith and credit of the U.S. government and its citizens. But when the Social Security trust fund does the same to make good to its own citizens what they contributed, it's just a book-keeping fiction?

    3. West Texan says:

      I have the same issue with social security that I do with Obamacare. Domestic entitlements are states' business and don't belong at the federal level. The fix is to work with states to slowly transfer retirement security back their way. This would avoid pulling the rug from under current SS recipients while allowing states time to gear-up with their own programs and/or offerings.

    4. Bobbie says:

      What kind of education did Harry Reid get? He must be overpaid so much it's easy for him to lie, cover, and just be Hairy. It's unacceptable to have the mentally challenged in control of others who aren't.

    5. Pingback: Social Security is Adding to the Debt Now | Big Propaganda

    6. Stirling, Pennsylvan says:

      It's hard to change the minds of so many "Lemmings" that have been fed a lie for so long that America will never go broke, everything is fine, etc… The fact that Reid's state of Nevada voted him back office in 2010 says a lot to the mind set that plagues this country. The problem is until the country really is bankrupt and checks do not go out at all will the democrats be forced to own up to this lie. This is why shutting down the government would be a better idea and would force the debate on our financial issues. If Republicans actually wanted a conversation platform to the american people they would have every "lemming" or "Freeloader" of the system's ears to hear just why they arn't getting their check, and it might actually force people to become more independent and less reliant on the government to survive.

    7. he JScope, dallas zt says:

      As someone who views political issues from a conservative business perspective, I am continually shocked at the intentional financial misstatements about the social security trust fund by financial types, regardless of what they think of social security. Consider if you put money in a bank savings account, the bank took the money out of the savings account and spent it, then the bank said it no longer had the money to pay you back and would not borrow from its borrowing sources to pay you back because that added to the bank's overall debt, so you are just out of luck. For decades working Americans put real money they earned into a real social security account. Politicians took real money from the SSI account and spent it for the benefit of taxpayers. Politicians passed legislation that said the treasury bonds that were to pay back the borrowed money were converted to a book keeping device and no longer real assets. This was financial sleight-of-hand, a creative way to get something for nothing. By this logic, let's tell China the U.S. has declared the bonds we gave China to loan us money are being converted to a mere book keeping device and therefore no longer required to be repaid. Let's declare the entire 14 trillion dollar debt owed to creditors a book keeping device and say we no longer have to pay them back. Deficit solved. They'll call it default but you can give them the same answer you give to social security recipients.

    8. Jeanne Stotler,Woodb says:

      Considering the fact that only one of my children is making "donatons" to SSI that cover my checks, and the others contribute as well, doesn't this tell us how badly managed Social Sec. is. My check = xxx, son 1 contributes xxx, Son 2, 3, 4, also contribute as well as daughter 1 and daughter 2, that makes a surplus from this family. Problem is John Doe never contributed and gets xx, Jose and Maria are here illegally and both get checks amounting to x each and they have a child that is getting SSi due to Maria used drugs. I could tell you dozens of scenerios that show you where the money goes other than to retirees who paid into the fund for years, I started working when I was 14. Also remember there are hundreds who paid in and died before collecting, almost everyone of us can name 10 or more people we knew who died just prior to retirement or shortly after. It's time to stop paying Ret. Congressmen salaries for life,make them go on SSS like the rest of us, giving illegals SSS, and we need to raise or do away intirely with the limit you make before deductions stop, and put it back in a locked box, not available for Congress to use for their petty cash.

    9. Jeanne Stotler,Woodb says:

      I have one more suggestion, all money being wired to Mexico or any other country be taxed at the time it's sent as most of this is from people who do not pay taxes and they send a large portion of what they make back to the country they came from. I've seen this happen in the grocery store and in Bank of America.

    10. Norm CT says:

      Great article, but isn't one of the main reasons SS is'broke' is the government took the money, spent it snd issued IOUs?

    11. Mike, Wichita Falls says:

      The SS trust fund used to supplement the budget; it was in effect a creditor as are American, Chinese and other bond holders. Now it is a line item in the general budget, the CR or whatever Congress is doing, and is thus adding to the deficit. If this country ever starts running surpluses again, what is the repayment priority? Trust funds, Americans, Chinese, etc.? If the trust fund is essentially a creditor, will it receive interest as would other creditors? Trust fund…what an oxymoron.

    12. Dolores - New York says:

      And why are there only Treasury Bonds in the Trust Fund? Because the government stole the monies and put the bonds there. The government has stolen 2. plus trillion dollars from the Trust Fund and that is why it is in trouble. Oh, and by the way, if you look at your pay stub there is a deduction for SS on it plus another for Medicare. Also your employer has to contribute to the SS fund so part of it is their money. Google OASDI to get info on Social Security. This is the new name for Social Security. It is your money they are taking.

    13. Leon Lundquist, Dura says:

      Conn, I would expect you or George Colgrove to explain to the folks how the Progressive Socialists raided the Social Security Fund with their 'harmless' expansions of coverage for Mental Health Disability. The strictly pension like function of SSI was sacrificed for the Social Justice Agenda. You can't get disability unless you are mentally defective, somehow or a bum. I think it is criminal to destroy our American Safety Nets! Recently the SOBs (Society Of Bums) destroyed the Unemployment Fund by extending coverage to Two Years! That is actuarily Insane! Seven Quarters of work and Eight Quarters of benefits?

      When the Democrats shut down the Government, I will bet you money the Union Government Employees will still get paid! That is to insure that the Demo-crat plan doesn't 'backfire' on them and actually save the American Taxpayer anything! Watch! The Gov Union guys will be Publically Paid Rabble Rousers serving the Foreign Interest (Bringing down America ala Kloward/Piven). Sickening!

      Didn't they just get finished destroying the Safety Net of Medicare? And the Safety Net of Health Insurance? Hell! The Girl Scouts can't sell cookies! You would think spending all the money there will ever be is "Extreme" but they need to destroy the American Safety Net of savings, Capital and Investments. Impeach the Real Extremists! What a thought! Actually following the Rule of Law? Unthinkable in America!

    14. Leon Lundquist, Dura says:

      Sorry for the inaccuracy, it is One Quarter of Unemployment gets you Four Quarters of benefits.

      Seven Quarters of Social Security payments gets you years of Social Security benefits (some 30% goes outside the USA). So, it is so much worse than above. People who never paid a dime into Social Security get their Social Justice check off their parent's 'pension' in the non existant Lock Box. It is confusing because you just can't believe how easy it is to steal from Old Folks! "Honor your Father and Mother" by stealing everything from them and giving it to bums.

    15. Pingback: ~ JUST IN ~ Daily News Digest for Wednesday, March 30, 2011 | Just Piper

    16. Wildcat from Dallast says:

      Social Security and its associated benefit programs entered into the fray of fiscal depravity during the Eisenhower administration, and it has only become worse since! One need only to look back (research if necessary) then remember it was the Democrat controlled legislature during President Eisenhower’s term who said the Social Security Trust Fund has more money than they could ever spend on its intended recipients so they wrote a bill that quickly passed (and perhaps overturned a veto as well) allowing them to break into the trust fund and raid the coffers thereby spending the money on things the general fund was designed to cover. . Then it was exacerbated three more times beginning with LBJ’s Great Society programs which promoted the poorest of the poor (and primarily African American families) to behave outside the norm and enabled them to get paid to do so thereby tearing apart their families due to the newly created welfare system of entitlements. One wouldn’t think it could get any worse but it did on two such occasions including when under President Carter illegal aliens were given these same entitlements and then again when VP Gore cast the deciding vote to tax social security benefit checks.

      The focus should be on developing, and more importantly implementing a common sense plan that would incentivize taking individual financial responsibility to take care of yourself rather than creating more unnecessary government programs which are inherently rife with inefficiency, fraud, waste and a lack of maintaining the dignity of the individual.

      Below I have drafted a few ideas that would promote the rugged individualism this great country was once known for, promotes the most basic unit of society; the family with simultaneous debt reduction and actual refilling the not-so-ironclad-box called the Social Security Trust Fund.

      There are several tax and incentive concepts that could be applied to extract the American citizens out of this mess without overburdening everyone’s wallet. Simply not funding the Progressives/Statists/Socialists programs would stall the spending aspect. Repealing specific unnecessary programs including Obamacare, and if need be, dismantling federal departments that haven’t met their mission since inception (DOE) and others. Repealing the income tax from 1913 and replacing it with the FAIR TAX, no increase tax on gas or diesel fuel but review the inclusion of a specifically targeted and minor percentage VAT of 5% with half of that going to repay Social Security and the remaining half going to pay down the principle of the debt with the caveat that as the one becomes fully paid off that portion of the VAT now gets applied to the remaining program in need of reimbursement and once completed the VAT ends on December 31st of that year without exception. There is a need to incorporate a severe punitive action for any Legislator OR member of the Executive branch who even attempts to modify any of the terms is this law once enacted. Change the corporate tax structure enabling businesses to write off the cost of health insurance as a cost of doing business on their corporate taxes [making an allowance for individual policy holders to do likewise relative to the FAIR TAX provided they provide proof of said insurance AND NOT allowing non-U. S. citizens (illegal aliens and those who are not yet bonafide U. S. citizens to do this; they pay it all!], *This would be a return to the practice used for a year or two during WWII (but make it permanent) that businesses will write off all health insurance premiums as a cost of doing business! Now, those who before had to contribute pre-tax dollars for their health insurance now have more usable money in their paycheck. Changing the structure of how the government pays out nursing home benefits for Medicare and especially Medicaid while simultaneously incentivizing citizens taking personal financial responsibility for such care and not penalizing any financial gain (which is usually temporary) for excess benefits derived from Long Term Care (LTC) insurance policies, not taxing social security benefits and not paying illegal aliens any welfare benefits. A fortified health savings account plan in which tax exempt money would be placed in a separate interest bearing account for individuals and families to draw from to better deal with routine or even unexpected health care costs that if not used could be rolled forward indefinitely and could be willed to other family members for portions not used. Make the annual max amount per family member in the range of $5K to $10K and tied to social security numbers. If, by chance the money is not fully consumed by the time they reach the age of retirement or nursing home admittance then they can use the money to improve their quality of life however they choose.

      In order to reduce future financial liabilities by the government for both Medicare and for Medicaid, why don’t we incentivize taking personal responsibility for our individual healthcare (to include long term care insurance [LTC]) during the preponderance of our lifetime? We already know that the greatest costs associated with these programs routinely occur in the last few years of the person’s life. Let’s start a program where citizens who purchase and maintain Medicare Supplement Insurance plans above the federally mandated Plan C and who purchase and maintain a LTC insurance policy that would cover the current cost plus and an additional $100 per day benefit of the most expensive type of skilled nursing home care which is a dementia or Alzheimer’s unit, with the following mandated features: inflation rider, return of premium rider, lifetime benefit and a 90 day elimination period. Four additional important facets include that the individual pays no tax on the premium dollars to cover these insurance policies, that benefits paid above and beyond the cost of the nursing facility will not be taxed (by the federal and the state government period) and the government will pay the first 90 days of their nursing home (assisted living and/or skilled nursing) stay and the patient does not have to change “beds” from a Medicare or Medicaid bed to a self paying bed. Paying for the first 90 days of which ever happens (assisted or skilled) is dramatically cheaper than paying for the entire stay much less the last six months to a year. The government’s financial liability is reduced and patient gets to choose and control his or her destiny. Also, since most insurance policies include Hospice care, that cost too is removed from the government’s liability. Also, I would repeal the social security and Medicare/Medicaid law enacted during the Carter administration that had the government take on the financial responsibility for giving those aforementioned benefits to illegal aliens! That will go a long way to making those programs solvent longer. Next is to make the uncovered illegal alien pay before any medical services are rendered like they do in Germany today. No free care for illegal aliens.

      The welfare to work programs that worked so well in several states need to applied equally across America to get those able but unwilling to get to work. Another modification would be not to incentivize having babies the parents have no way to financially support and no plan to support but intend to use the existing welfare program to get an additional $1500 per month not including the cost of food stamps, Medicaid, Head Start school meals etc up to the child’s 18th birthday.

      While this is a rough draft it sure seems to make more sense than what has been coming out of Washington D C. since they passed the federal income tax amendment, the 16th Amendment.

    17. Alex, Wayne, NJ says:

      No let's just take all of our money and give it directly to the richest 400 Americans, who already control 50% of the wealth. Oh and let's EXTEND tax cuts to those who make more than a million dollars a year. Let's not even mention the fact that General Electric had profits of 14 billion dollars last year and paid absolutely 0 taxes. That's America: the rich get richer, and they recruit through manipulation those who are unfortunate enough to buy into their top-down viewpoint of economics. How do you fall for the same propaganda time and time again? Oh RIGHT…Fox "News".

    18. Bobbie says:

      Oh, ok Alex!

      Why do you call truth, propaganda?

    19. Corky, Howey in the says:

      I worked my whole life and paid into SS. Now, I'm retired and I get $1056 a Month!

      I get $48 in food stamps. I went to the VA for catactacs and that's an 8 month wait. Illegals get better treatment than I and I AM an AMERICAN! You can argue all you want but, until we vote these fools out of congress and put real Americans in we are fighting a losing battle. obama, reid and the rest of the crooked democrats are inten on killing the Great Countyr…..

    20. Jim Campana, Lansing says:

      A worker toils hard all his life and saves regularly, putting part of his pay each week into a safe-deposit box at his local bank. One day, a robber holds up the bank and takes all of his savings–but the robber is wily, so he leaves an IOU note behind in the safe-deposit box. A city councilman says the worker should be protected. The local newspaper, however, editorializes that there was no robbery, only a big debt left behind, which is somehow the fault of the worker and of the bank. And the solution that the newspaper recommends is to "reform" the safe-deposit-box system, so that part of the worker's savings each week will go directly to the robber, so he can pay off the IOU.

      Crazy?

      Read Mr. Carroll's article again.

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