Congress did nothing to slow the budget’s biggest element: entitlement spending. The Republicans who raised this point are right. Slight changes can make a big difference.
A “chained” Consumer Price Index in Social Security, for example, would make future raises slightly lower. At one point, President Obama put that on the table, then took it off.
Another reform is to raise the retirement age, starting several decades out. It wasn’t done.
Uh-huh. Except, Social Security has absolutely nothing to do with the federal budget. Nada. Zip. Bupkes. (Unless, of course, your goal is to rob the Social Security trust fund in order to balance future deficits.)
Let's be clear: Social Security is entirely off-budget, solely paid for through a dedicated payroll tax. For decades Social Security has been accumulating a surplus in order to better accommodate future demographic shifts, specifically the aging of the Boomer generation, and these surpluses have been invested in US treasury bonds. Yes, the federal government will eventually have to shell out $2.6 trillion as these bonds are redeemed. But that's true of all treasury bonds. If the federal government hadn't borrowed the money from the Social Security trust fund, it would have borrowed the money from somebody else. There is no shortage of buyers for US treasury bonds. That's why the interest rates are so low.
When bonds mature the treasury redeems them, usually selling new bonds to cover the cost. Whether the bondholder is China or a corporation or Social Security has absolutely zero impact on the federal budget.
Furthermore, this notion the editorial perpetuates—that Social Security is headed toward insolvency—is total bullshit. Social Security has never been a pension fund from which retirees draw on their investments. Rather, it was always intended to be pay as you go—a direct transfer from today's workers to today's retirees. Even if we did absolutely nothing, Social Security would be able to pay 100 percent of its scheduled benefits through 2036, at which time the trust fund will be exhausted. But even then, incoming payroll taxes at current rates would still be sufficient to pay about 80 percent of the benefits currently promised. But since the average scheduled benefit in 2036 is projected to be 25 percent higher in real dollars than it is today, 80 percent of the 2036 benefit would still be more than the inflation-adjusted benefit retirees are receiving now!
So despite what you might be led to believe by the Seattle Times, raising the retirement age and/or linking benefits to a chained CPI would have no impact whatsoever on the federal budget deficit, and neither is necessary to maintain the long term solvency of Social Security. The editors simply have no idea what the fuck they are talking about.
Speaking of which:
Congress did agree to let the 2 percentage-point cut in Social Security taxes expire, raising the withholding tax on American workers. This will be painful, but the cut was never meant to be permanent. Social Security needs the money.
No, no it doesn't! The payroll tax "holiday" did not cost Social Security a penny. The $100 billion or so a year the tax cut cost was fully credited to Social Security out of general revenues, and workers were credited for the full contribution for the purpose of calculating future benefits. If you want to make the argument that letting the tax cut expire helps address the deficit, fine, but to justify it by saying that "Social Security needs the money" is just plain stupid.
It's like they're not even trying.
In defense of the Seattle Times editorial board, they're not the only ones misrepresenting the way Social Security and the budget work. Danny Westneat made a similar erroneous assertion—that Social Security is the "real issue"—in yesterday's paper, and he's no idiot. What these opinion writers are, is lazy. They've read these assertions so many times—often in their own newspapers—that they've simply accepted them as fact. Once again demonstrating the wisdom of Mark Twain's quip: "If you don't read the newspaper, you're uninformed. If you read the newspaper, you're mis-informed."