Since there’s a lot of intentional and unintentional misinformation going about Social Security, it’s worth it to get down to a few basic facts that dispel errors.
First, Social Security doesn’t contribute to the deficit. It doesn’t belong in discussions of the deficit. Under the law, Social Security can only give out money from the Social Security trust fund. So the idea that reaching into other funds to pay Social Security benefits is going to break the country has no basis. Social Security and the deficit are apples and oranges. As for the program’s being expensive to run, its administrative overhead is only a minuscule 1 percent.
In the year 2010, though the economy was collapsing, Social Security still had a $2.6 billion surplus, enough to pay benefits through the year 2037 with no adjustments. Social Security’s surplus has to be invested in U.S. Treasury securities; it can’t be used to play the stock market or be “offshored” to invest in other countries.
Social Security cannot borrow, but the government can borrow from Social Security. Once the George W. Bush administration had run through the surplus that was left after Bill Clinton’s second term as president, it borrowed plenty from the program: $98,700,000,000.
As former U.S. senator Don Riegle and his wife Lori Hansen, who served on the Social Security Advisory Board, have pointed out, opponents of Social Security “never mention how much our government has borrowed from Social Security. In fact, the government has borrowed more from the Social Security surplus than it has from any other source in the world, including China. As a result, Social Security now ‘owns’ nearly 18 percent of the federal debt, making it the largest single holder of U.S. debt. The government owes almost twice as much to Social Security as it does to China and Hong Kong” (Huff Post Politics, April 5, 2011).
It’s no secret that financial interests would like to take the increments of retirement money that Americans now salt away into Social Security and harness them to Wall Street. But Riegle and Hansen offer another rationale for opposition to Social Security: that some people don’t want the government to have to pay back the huge sum it owes the fund, a fund derived from Americans’ earnings from work.
In other words, when some express the fear that Social Security will contribute to the deficit, what they really mean is that the government could be in even more financial trouble if it complied with the law and paid back the money (more than $2 trillion borrowed since 1984) that belonged to Social Security—read: the American worker—in the first place.•