What really ought to scare Grandma? How about that President Obama has made it clear that her Social Security is “guaranteed” only if those in Washington feel like paying up?
From an editorial in Investors Business Daily:
Obama beat everyone … with his scaremongering claim that Social Security checks are at risk if he doesn’t get his way on the debt ceiling. “I cannot guarantee that those checks go out on Aug. 3 if we haven’t resolved this issue,” he told CBS News, “because there may simply not be the money in the coffers to do it.”
Wait! What happened to Social Security’s “guarantee”? You know, the iron-clad assurance of Social Security benefits in exchange for paying into the program your whole working life? It’s something Democrats constantly talk about, particularly when attacking Republicans who propose privatizing the program.
As Nancy Pelosi once put it: “Social Security has never failed to pay promised benefits, and Democrats will fight to make sure that Republicans do not turn a guaranteed benefit into a guaranteed gamble.”
The AFL-CIO warned in 2005 about “President Bush’s plan to replace Social Security’s guaranteed benefits with risky private accounts.” The AARP describes Social Security as “the guaranteed part of your retirement plan.” Etc., etc.
Turns out, this “guarantee” is a lie.
This is an excellent point that I touched on when Obama and the lame-duck Congress agreed last December to a one-year cut in the federal payroll tax (you know, the last time Obama called Republicans “hostage takers”). The cord between payroll taxes and Social Security benefits is being severed ever more.
If your payroll taxes truly entitle you to Social Security payments when you retire, then how could Obama withhold those payments from retirees now? Even if you understand that today’s workers pay for today’s retirees, but believe the politicians’ assurances that excess payments are safely ensconced in a trust fund, then you might wonder how Obama could avoid making Social Security payments when payroll taxes are still coming in and there’s all that trust fund money to make up the difference. (In fact, the politicians have already spent almost all of the trust fund money, and would have to use new tax revenues to pay back the trust fund.)
What’s more, Reuters’ James Pethokoukis earlier this week posted a chart demonstrating that projected tax receipts through the month of August would be enough to cover all interest payments on the debt, Social Security payments, Medicare payments, “essential” defense spending about about $50 billion of “other” for the month. As I’ve said before, that doesn’t mean there wouldn’t be a price, maybe too steep a price, to pay for failing to raise the debt ceiling — but it does mean there will be “the money in the coffers” to keep up Social Security payments. As he does too often, Obama is using a patently false example to make what otherwise is a defensible point.
Either Obama’s not being truthful when he says Social Security payments might be at risk, or he and his fellow Democrats have been lying when they assail Republican plans to reform Social Security as attacks on an otherwise rock-solid program.
So, which is it?
And are you still so sure that giving individuals more control over their own retirement funds is such a bad thing?
– By Kyle Wingfield