The Myth of the Social Security Surplus
Posted by Bharat
I think this is a relatively well known fact (at least for those that pay any attention to politics), but there’s no harm in presenting it to those that don’t know about it.
There’s been a lot of news lately regarding Social Security and Medicare/Medicaid and how these programs are going bankrupt. However, many believe Social Security is currently fine and that there is actually a large surplus (2.7 trillion as of 2011) that will cover us for a time.
Social Security takes in money from young wage earners and passes it on to retirees in the program. The remaining money was supposedly kept as a surplus, but a lot of people believe in the myth that this surplus was some sort of lock box. The truth is that politicians have taken this money and spent it on other parts of the budget and instead left the surplus with IOU’s in the form of government bonds.
Who pays for these bonds? Tax payers. Who paid for the surplus in the first place? Tax payers. So tax payers are effectively paying twice for any of the money that goes into the surplus.
As a related fact, many liberal pundits like to claim that Bill Clinton, former president, ran a surplus in government spending. This is a myth as well. The truth is that the national debt expanded in every year of Clinton’s presidency. So why are these claims made? Because Clinton took money out of the Social Security surplus in order to pay for the government budget. See here for more information.
I’m not making an assertion that Social Security doesn’t help those on the program or that the majority of citizens don’t like it, but SS as a program is a politician’s dream. It is a simple money transfer system that politicians can conveniently take money out of and spend for other things, in the guise of keeping a surplus. Meanwhile, tax payers are forced to pay twice to keep the program solvent.