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| Image courtesy of leftcoastrebels.com |
During the severe weather watch in the Twin Cities the other day, I gathered with my neighbors in the lobby of my “55 or better” seniors apartment building. While the storm outside spent its fury, our conversation turned to the debate raging in Washington over how to fix the budget deficit that has boiled down to a choice between shredding the safety net for those most in need, or asking the wealthiest Americans to pay their fair share of taxes.
The gathering in the lobby evoked my preacher side, and I noted that conservatives insist on describing America as a “Christian nation.” At that, my audience burst out in laughter. When the noise subsided, I wondered aloud if our self-righteous conservatives had even read the teachings of Jesus. Warming to my topic, I asked: “Where in the Bible are we instructed to take from the poor and give to the rich?”
As we all know, Social Security and Medicare have long been prime targets for conservative wrath and President Obama, the star appeaser in the Democratic Party, has of late put those Democratic “sacred cows” on the bargaining table.
Thus, today’s deciders – the Obama Administration and the Republican Right – continue to spread their lies about the solvency of Social Security and Medicare. And as we all know, a media that includes publicly funded PBS, has eagerly spread the toxic spillage spewing from the enemies of any and all safety nets for the elderly, the disabled, the unemployed, and the working poor.
Rarely, has a media representative bothered to speak the truth about the solvency or lack thereof of Social Security, but out in the blogosphere one does occasionally come across a post such as the recent one by Nancy Altman and Mark Scarberry at Huffpo titled “Disentangling Social Security from the debt ceiling.”
In light of the fast and loose misrepresentation of the facts on Social Security and Medicare throughout the budget deficit debate, the truth is startling:
Social Security appears to be a key bargaining chip in the struggle over the debt limit. President Obama may have played smart politics when he threatened that, if the debt limit is not raised, Social Security checks might not go out on time. But he was needlessly scaring the program's fifty-five million beneficiaries, the vast majority of whom are highly dependent on each month's Social Security check. So was Speaker John Boehner who, in a recent interview, also spoke of the possible interruption of benefits.
The truth is that checks can go out, in their full amount, without adding a penny to the federal government's total debt. They can be paid without subtracting more than a tiny fraction of a percent -- if anything -- from the funds currently being used for other government purposes -- a reduction so small that it could be considered a rounding error.
Three key facts make this true. First, Social Security has its own dedicated income stream for payment of benefits and associated administrative costs. Second, in addition to its current income, Social Security has an accumulated reserve of $2.7 trillion in its trust funds. That reserve is invested, as Congress has always required, in what has been the safest investment on Earth -- treasury bonds backed by the full faith and credit of the United States. And third, the $2.7 trillion in treasury bonds held in the trust funds is included in the $14.3 trillion total debt that has reached the statutory limit.
Three key facts make this true. First, Social Security has its own dedicated income stream for payment of benefits and associated administrative costs. Second, in addition to its current income, Social Security has an accumulated reserve of $2.7 trillion in its trust funds. That reserve is invested, as Congress has always required, in what has been the safest investment on Earth -- treasury bonds backed by the full faith and credit of the United States. And third, the $2.7 trillion in treasury bonds held in the trust funds is included in the $14.3 trillion total debt that has reached the statutory limit.
If the debt limit is not raised, Social Security's Board of Trustees could and should exercise its right to redeem (cash in) as many of Social Security's bonds as needed to pay benefits. Every dollar of principal (though not accrued interest) that the federal government would be required to pay to redeem the bonds would reduce the total debt subject to the $14.3 trillion limit. That would make room under the debt ceiling and allow the government to borrow an additional dollar from the public to replace every dollar of principal paid by the government.
