Deficit in Social Security Escalates [teapartyeconomist]
August 13, 2012 Leave a comment
The media are slowly beginning to admit that Social Security is running a deficit. I first announced this in early 2010 in my video, Retirement Armageddon. It’s posted here. This information was ignored. Not now.
A recent story in the Washington Post began with this:
WASHINGTON — Now that Social Security is paying more in benefits than it collects in taxes, there is a fierce debate among politicians, academics and advocates about whether those shortfalls are adding to the federal budget deficit.
This means red ink. It means that FICA taxes, called “contributions,” no longer provide a nice official sur0plus to the admitted on-budget budget. This accounting deception has gone on for over 40 years. Deficits in the off-budget deficit are ignored, while the money from Social Security’s “surplus” was counted as black ink in making the assessments of the size of the official deficit.
The Social Secutity Administration must now hand over non-marketable IOUs from the Treasury to make up the difference. Congress must borrow this money. This adds to the official on-budget deficit.
Congressman Xavaier Becerra (D-CA) repeats the accounting deception. “Over 77 years and now through 13 recessions, Social Security has not added one penny to our deficit or our debt.” It has added trillion of dollars to our debt, but the debt is hidden off budget. It is part of the $222 trillion in unfunded liabilities reported by Prof. Lawrence Kotlikoff of Boston University. I have written about this here.
Rep. Becerra’s deception was reinforced by Senator Bernie Sanders of Vermont. “I believe that Social Security has not contributed one nickel to the deficit because it is funded by the payroll tax.”
The Post now admits what we critics of the system have been saying for 40 years.