Hoppy Kercheval's commentary today about how politicians are "raiding Social Security" illustrates his long confusion with the program and his desire to privatize or gut the program. Hoppy seems to be getting his inspiration from this Wall Street Journal article.
As we've illustrated here
, Social Security is a basic means of survival for many of our elderly. Not to mention that those near retirement who have very little in wealth
will be depending more on the program.
According to the Social Security Trustees Report
, and much to Hoppy's chagrin, the trust fund will be able to keep paying full benefits through 2036 without any changes in the program. At this time, Social Security could still pay 75 percent of the scheduled benefits for many decades after this date. Modest changes in taxes and benefits to the wealthy could put the program on sound footing indefinitely.
Hoppy notes correctly that 2010 is the first year since 1983 in which the program's total expenses exceed its tax income. The reason for this imbalance is the current recession. The actuaries predict that this imbalance will shrink dramatically in 2011 and pretty much disappear in 2012 (although it will return in 2015). The good news is that during this period the trust fund will grow because of the interest income the trust funds will receive from the Treasury bonds they hold.
As for "raiding" Social Security money, let me paraphrase economist Dean Baker. It makes about as much sense to say the Daily Mail raided my bank account as to say the government has been "raiding" Social Security. As Baker notes
There was absolutely nothing improperly done with Social Security money. It was used to buy government bonds. Readers of a business paper like the
WSJ Daily Mail may have thought that its reporters commentators understood how U.S. government bonds work.
The Social Security trust fund will redeem the bonds when they are needed to pay benefits, just as private citizens and corporations often buy bonds and then sell them off when they need the money for some other purpose. In the meantime, the government used the money it borrowed for other purposes. That is the way government bonds and other bonds work. It is also exactly how the law was been written, and it has been followed.