Josh Marshall: Stop Saving Social Security

I said last night that I disagreed with the oft-stated claim that it just gets harder to 'fix' the non-existent Social Security crisis the longer you wait. In fact, as I thought about Obama's proposal to remove or retool the cap on Social Security taxes I got to thinking that it's not just not necessary to do right now but that it actually might be a bad idea altogether.

Many have argued that having this debate at all buys into the right-wing argument that there's a 'crisis' that needs to be solved and thus that the politics are all wrong. But put that aside, let's talk about whether it makes sense even on substance.

When it comes to the policy and number-crunching nitty-gritty of Social Security I'm definitely an amateur. But I think I've got a decent sense of the political-economy of the question. We need to remember that now and for at least a decade into the future Social Security is actually subsidizing the rest of the federal budget. The program brings in much more than it pays out. As we all remember from the voluble debates two years ago, the surplus is being used to buy US government bonds which go into the Trust Fund. And that socked away money will keep the program solvent through the middle of this century as the baby boomers retire, and revenues in no longer cover promised payments out.

We've been doing that for about a quarter of a century.

The problem on the political side of the equation is that the enemies of Social Security have spent a couple decades arguing that the Trust Fund doesn't exist or that it is simply a bookkeeping device with no true financial meaning. If that's true, it means that American workers have spent the last twenty-five years using their payroll taxes to subsidize general revenues and make it easier to float big tax cuts for upper-income earners without getting anything in return.

If we start pumping a lot more money into Social Security coffers now it will by definition go into more government bonds, which is another way of saying that it will go toward funding our current deficit spending. In fact it will enable more deficit spending and probably more upper-income tax cuts because it will make the consequences of both easier to hide.