On Tuesday, November 27th, U.S. Senator Jeanne Shaheen (D. NH) had this to say about Social Security on MSNB's Jansing and Co.:
http://www.politifact.com/...
"I think we do need to take Social Security off the table because Social Security has not contributed to the debt and the deficits." - U.S. Senator Jeanne Shaheen (D. NH), MSNBC's Jansing and Co., 11/27/12
Couldn't agree more, but PolitiFact, the same group that claimed that the biggest lie of 2011 was Paul Ryan's (R. WI) Budget does away with medicare as we know it, rated Shaheen's statement as mostly false. Here's their reasoning:
Social Security is designed as a self-supporting, pay-as-you-go program, in which current payroll taxes pay for current benefits. This played out for many years, and with interest, the program has built up an annual surplus, which appeared to help offset the national deficits.
But, in reality, Social Security is not closed off from the rest of the government. The program’s surplus funds are frequently invested in Treasury bonds, and during surplus years, the bonds earn interest paid with other government dollars. And in recent years, the amount of taxes collected have not equaled the benefits distributed, leaving the Social Security funds facing a cash deficit, which then forces the government to borrow more money to offset.
This was the case in 2010 and 2011, and Social Security trustees anticipate higher deficits looking forward.
While there’s a case for both interpretations, we see clear evidence that Social Security does affect the nation’s debt and deficit.
We rate Shaheen’s claim Mostly False. - PolitiFact, 12/10/12
Luckily Stephanie Gorin, executive director of the New Hampshire chapter of the National Association of Social Workers and Nancy Altman, co-director of Social Security Works, defended Senator Shaheen's statement with facts:
http://www.nashuatelegraph.com/...
By law, Social Security cannot spend more than it takes in. It can only pay benefits if it has sufficient income to cover the cost. It has no borrowing authority.
According to the most recent report by Social Security’s board of trustees, Social Security had a $69 billion surplus last year alone. Far from increasing the deficit, Social Security loans funds to the federal government that reduce the deficit.
The relationship between Social Security and the debt of the United States is a source of misunderstanding and confusion, but it is not a matter of conjecture or opinion. - The Nashau Telegraph, 12/16/12
Now I'm going to bring up both PolitFact and Gorin & Altman's arguments to prove that PolitFact was wrong to claim that Shaheen was wrong. First their's PolitiFact's claim that “the interest payments earned by Social Security only amount to a reshuffling of government dollars.”:
As noted in the prior PolitiFact rulings, the Social Security trust funds may be considered separate, but, in reality, they are not "locked boxes" or closed-off savings accounts. Rather, Social Security is required by law to put its entire surplus into interest-earning government bonds.
The dollars invested in Treasury bonds are frequently mixed and invested with other revenue sources in the government’s general fund, and, together, the money is used for other government purposes, including spending, repaying debts and cutting taxes.
So, when the Social Security trust funds collect interest, they are merely accepting money from other parts of the government, according to Howard Gleckman, an analyst for the Tax Policy Center, a joint effort between the Brookings Institution and the Urban Institute. Without considering interest, Social Security has actually been running a deficit over recent years, Gleckman noted. And, when Social Security runs a deficit, the program draws on interest from the Social Security bonds, forcing government officials, already operating at a deficit, to borrow more money from other sources to make up the difference.
"It’s an accounting fiction," Gleckman said of the interest payments. "It helps make the Social Security funds look more solvent, but really you've just taken (money) out of general fund. … The money is simply being transferred from one government account to the next."- PolitiFact, 12/10/12
Now here's Gorin and Altman's counterargument:
By law, when Social Security has a surplus, it invests that surplus in the safest investment on Earth – interest-bearing Treasury obligations backed by the full faith and credit of the United States. Including last year’s surplus, Social Security currently has an accumulated reserve of $2.7 trillion.
Just as the law requires that employers keep assets from their pension trusts carefully accounted for, separate from their general operating funds, so the law requires that the assets of the people’s pension – Social Security – be held in trust separate from the general fund of the United States.
The Social Security contributions deducted from the paychecks of America’s workers, and matched by their employers, are funds dedicated to the exclusive purpose of paying for Social Security; they are held in trust for the beneficial use of working families.
The Telegraph is wrong in stating that “the interest payments earned by Social Security only amount to a reshuffling of government dollars.” If the federal government borrows money to pay off its obligations to Social Security, it would owe more to the public but less to Social Security. - The Nashau Telegraph, 12/16/12
PolitiFact also uses the "Social Security is going broke!" scare tactics in their argument:
In 2010, the program ran a "cash deficit" of $49 billion, according to the Social Security Administration’s summary of its 2012 annual report. The following year, the deficit stood at about $45 billion, and, looking forward, the program’s future doesn’t look much brighter.
Social Security trustees project the program’s cash deficit to exceed $60 billion over the next few years, and by 2033, the trust fund will no longer have enough money to cover full benefits for beneficiaries, according to the most recent estimates.
"The Trustees project that (the deficit) will average about $66 billion between 2012 and 2018 before rising steeply as ... the number of beneficiaries continues to grow at a substantially faster rate than the number of covered workers," according to the annual report.
Lawmakers from both parties have proposed ways to bridge the gap and salvage the program. But, with the insolvency date looming, Social Security stands to have an even greater effect on the debt moving forward, according to Laurence Kotnikoff, an economics professor at Boston University. - PolitiFact, 12/10/12
Gorin and Altman argue back that cuts to Social Security would have no effect on decreasing the deficit because Social Security doesn't contribute to the deficit:
For those used to thinking about Social Security as just another spending program and about Social Security contributions as just another tax, the fact that Social Security does not and cannot contribute to the federal debt and deficit may seem counterintuitive, but it is true.
In a matter of months, the federal government will reach the debt ceiling, or the limit on the amount of money it can borrow. Cutting Social Security’s expenditures or increasing its income does not reduce the amount of debt subject to that limit. This sharply differs from cuts to expenditures from the government’s general fund, such as agricultural subsidies or defense.
If a program paid for from general-fund revenue were cut by $100 billion and nothing else changed, the federal government’s borrowing needs would go down by $100 billion. As a consequence, the federal debt would also go down (or more realistically, given the current large deficits, would go up less than it would have without the cut).
If the savings from that hypothetical cut were offset dollar-for-dollar by a cut in income taxes or an increase in other expenditures funded from general revenues, the federal debt subject to limit would be unchanged.
In stark contrast, if Social Security benefits were cut by $100 billion, the federal debt subject to the limit or total debt would remain unchanged. If the $100 billion savings from cutting Social Security benefits were offset dollar-for-dollar by a cut in income taxes or an increase in general-revenue spending, the total federal debt would increase.
Cutting Social Security’s benefits does not reduce by a penny the federal deficit or the total value of debt instruments issued by the Treasury Department. The only way to reduce the amount of federal debt the Treasury issues is to reduce the expenditures of the government’s general operating fund or increase its income. - The Nashau Telegraph, 12/16/12
So yeah, PolitiFact's own analysis on Senator Shaheen is rated
"Entirely False". Gorin and Altman thank Senator Shaheen for sticking up for Social Security. You should too. Call Senator Shaheen and thank her for standing up for Social Security and stay true to her word and vote against any cuts to Social Security, including the chained CPI:
(202) 224-2841
It's important that you call and say thank you and tell her to continue to fight for Social Security, Medicare and Medicaid, especially with a new proposal from President Obama to Speaker Boehner regarding Social Security and the chained CPI:
http://www.dailykos.com/...
So give her office a call and if you live in New Hampshire, here are her local offices:
Manchester: (603) 647-7500
Claremont: (603) 542-4872
Nashua: (603) 883-0196
Dover: (603) 750-3004
Berlin: (603) 752-6300
Keene: (603) 358-6604