Daily Debunker

July 14, 2005

With Congress due to consider two bills based on the DeMint plan, which stops the annual flow of Social Security surpluses into unrelated spending, Wednesday's New York Times ran a perfect illustration of why critics who argue that the proposal fails to sort out long-term Social Security solvency are missing the point. Tucked away in an article in the business section discussing the future size of the deficit is a crucial admission:

"Social Security's annual surpluses, which have been running around $150 billion a year, have been a major source of operating cash for the government. But those surpluses will start to decline before the end of the decade, and the program is expected to start running annual deficits in 2017."

That's the little secret about Social Security that doesn't get enough attention.

Until 2017, the system will run annual surpluses, meaning that workers are paying in more than comes back out in benefits. The surplus that generates each year should be saved for Americans' retirements, but instead Congress spends it on whatever they want. That's where the DeMint plan steps in. Under the provisions of the DeMint bill and the GROW plan in the House, Congress will no longer be able to dip into the trust fund, and the surplus will be dedicated to personal retirement accounts for workers who provided that revenue in first place.

The New York Times makes clear the effect of the raid on Social Security. If Social Security and America's retirement security is the first casualty, fiscal transparency is the second. With no check on how the surplus is spent, budget-setters have been using the full $150 billion to mask the size of the overall budget deficit. As the New York Times puts it, the surplus has been "a major source of operating cash." In other words, Congress has increased government spending by reaching over to Social Security whenever it runs low on funds. That's a bit like meeting your mortgage payment by raiding your savings and then convincing yourself you still have both.

It's time to stop the raid on Social Security.