Tuesday, June 21, 2005
Finally admitting the truth: Jon Henke over at Q&O highlights some spin from the lefty "think" tank the Center for American Progress on the Social Security crisis.
NEW PRIVATIZATION PLAN WOULD EXPLODE FEDERAL DEFICIT:
The Wall Street Journal claims that the proposal (which it calls "political jujitsu") would "create no new debt for the government." That's not true. Right now, money that is collected from Social Security payroll taxes that is not needed to pay current Social Security benefits is used to pay for other government programs. Absent an accompanying package of tax hikes or program cuts (don't hold your breath) the new privatization plan would divert all of those funds to private accounts and make our current deficit problems much worse. For example, using the Social Security surplus to help make ends meet, the 2006 budget deficit is expected to be around $400 billion. The Social Security surplus is expected to be $170 billion (see table S-10). So if this new privatization plan were to be enacted, next year's deficit would skyrocket to $570 billion. Things get worse over time. In 2009 the new plan would add an additional $230 billion to the federal deficit.
Read Henke's analysis for reasons why this doesn't really "add" to the federal deficit, but is merely moving future shortfalls forward -- we'll have to deal with them one way or another eventually.
What the CFAP has finally admitted is that the 2018 date for Social Security's tipping point is real -- and their previous claims about lockboxes and trust funds are a farce. The Wall Street Journal's suggestion for private accounts exposes this little accounting gimmick and CFAP has adopted the Republican position on Social Security's solvency shortfall date in order to decry this plan.
It's getting hard to keep track of where the left is on Social Security nowadays -- some days it's social insurance, other days it's a retirement fund. Some days it's going bankrupt in 2051, other days it goes belly up in 2018.
You almost need a scorecard.