Charles Krauthammer is on quite a soapbox, these days, arguing that Social Security is bankrupt and hence needs to be restructured, whether by cutting benefits, pushing back the retirement age (a favorite of those who don't intend to retire, and for whom, in any case, Social Security benefit payments would be the equivalent of the change they dump on the dresser every evening), or by some other means to keep it solvent.
Social Security, we are given to understand, is part of the deficit problem because, although actuarially speaking it works (that is, it has collected more money than it needs to pay out, and will remain in the surplus condition so defined for decades to come), it has made bad investments. Leave aside the likely Krauthammer response to a sudden discovery that, in fact, the Social Security Administration had been, these 30 years, stuffing the surplus into, say, Euros or the stock market: the System has taken the excess money it has collected and invested in government bonds, and the government --profligate Uncle that it is-- has simply squandered the money, leaving SSA with a bunch of worthless IOUs.
Krauthammer rightly points out that these bonds are owed by one branch of the US Government to another; and he scorns the notion that, in such a circumstance, the "full faith and credit" of the US means anything. "In judging the creditworthiness of the United States, the world doesn’t care what the left hand owes the right," he says. By this he means that, if the Treasury simply told the Social Security Administration to take a walk, those bonds are not going to be redeemed, the international markets would not care, and our financial position in the eyes of the world would not be changed.
Savor that thought: if the United States simply cancelled the Social Security program, the world would take no notice: financial markets would hum along without a hitch.
It is this kind of conceit that makes one wonder whether some opinion-makers have been too long ensconced in their think-tanks or faculty offices. It's not even necessary to construct the thought experiment in which fifty million senior citizens were told, one morning, that the checks would no longer be coming.
Well, Krauthammer would protest, it wouldn't happen like that. The government would be ... responsible (never mind that he is positing the opposite); it would cut benefits, or raise the retirement age, or, horrors, increase the payroll tax.
Fine. So his argument comes down to this: we must cut benefits now, or raise the retirement age now --he doesn't directly mention taxes; too painful for a rightie-- or else we will have to do so later.
As a call to arms, it falls a bit short of "The British are coming!"
But allow me to pursue the subject. Social Security, long hated by the conservative mainstream, is lumped in with the "entitlement" (a dirty word when it doesn't refer to Congressional perks) problem that is real, Medicare/Medicaid. The argument, of course, is this: Social Security is supposed to be self-funding.
Now hold that thought.
The next assumption is that Social Security, beginning this year or next, will pay out more than it will collect.
The conclusion is that this shortfall, a result of payroll tax collections being less than Social Security benefit payments, adds to the federal deficit and therefore must be corrected, within Social Security itself.
But wait, you will complain, that's okay: there's a huge surplus within the Social Security Trust Fund, from all those years up until today when the System took in more than it had to pay in benefits. Something sounds wrong here: either Social Security is a separate fund, entitled to draw as needed on its surplus, or its not. If it is, there's no imminent problem; if it's not, then it's just like any other government department --why single it out?
Think about this: if Social Security is not a separate fund, why should it be singled out more than, say, the Navy, or subsidies to corporate agriculture or Big Oil, for a haircut? No one ever warns that, next year, the Navy will be in a deficit position and so must be cut.
Here's the answer that dare not speak its name: Krauthammer and his chorus don't like Social Security. They like the Navy. The plan is to expand the military, because it goes where the really big money is, the money that goes into the pockets of those who don't depend on Social Security, will never miss it, and regard the dollars it pays out as a lost opportunity: the opportunity for more and greater tax cuts for themselves.
So Krauthammer wants it both ways, because it supports his agenda to have it so: Social Security is a "trust fund," and it must rely on generating a surplus (or at least on breaking even) to stay in business. But Social Security has no surplus --we spent that on other things-- and is not a trust fund, it's just one of the largest government expenditures, and so should be at the front of the line when those expenditures are cut.
Social Security is broke because it invested its funds in bonds that the government has the legal right to repudiate, without breaking a contract of the sort that is represented by government bonds in the hands of, say China. But because it is supposed to be self-funding (unlike the Navy), we must respect the fact that it is broke --we more or less intended this to happen, because we are inviting the government to act irresponsibly; leave aside the howls we'd be among the first to raise if it actually followed our advice.
And a final point: Krauthammer & Co. talk about the "solvency" of Social Security. They aren't serious, any more than they have ever been serious about the national debt. They don't want to "fix" Social Security so as to restore its solvency. They want any proposed fix to look so draconian that the program will be cut, will be allowed to wither, over decades, until it becomes our century's equivalent of the old WWII ration books: better than a poke in the eye, but it won't buy you much.
This is the political equivalent of killing your parents and asking for leniency because you are an orphan. But the unintentional irony of Krauthammer's position --he's just parroting the Party line-- should not mask its pernicious intent.
