We’ve seen the apology by Alan Simpson over his intemperate remarks, and that the White House accepted the apology (really, were they involved?) and announced that Simpson would continue to serve on the cat food commission. This has not comforted either groups like NOW or others, who maintained their call for Simpson’s resignation.
But I want to go beyond the 300 million tits and focus on the substance of his arguments. Because Simpson keeps bringing something up in these emails, whether to OWL’s Ashley Carson or CEPR’s Dean Baker. He keeps mentioning Stephen Goss’ report to the cat food commission from May 12 of this year. I’ve obtained the slides from that speech, and I have to say, I don’t think Simpson knows enough about Social Security to even collect it, let alone head a commission devoted to its future.
The presentation basically explains the Social Security system and how it works. It’s a primer, if you will. Slide 5 shows, in my view, that a commission focused on the budget deficit has no business involving itself in a separately funded program. It says that “Trust Funds enforce long-term budget neutrality” and if the Trust Funds get exhausted by 2037, which is the current schedule, “Spending is limited—-NO annual budget deficit.” In other words, Social Security cannot run a deficit and will adjust to the available funds. Regardless of whether you think that’s a good idea, the fact is that the program has basically no impact on the budget deficit whatsoever, unless you contort yourself into the lie that paying back the US Treasury bonds in the Trust Fund represents a “raid” on the budget. That’s what Matt Bai did in his preposterous story today, claiming that the $2.5 trillion in the Trust Fund, backed by the full faith and credit of the US government, “is sort of like saying that you’re rich because your friend has promised to give you 10 million bucks just as soon as he wins the lottery.” No, it’s like saying you’re rich because your friend owes you 10 million bucks by force of law.
Slide 6, which Simpson specifically pointed out, is merely the recitation of what the trustee’s report showed this year: all scheduled benefits can pay out until 2037. That’s 27 years of solvency, which I’d gather is better than practically every program in the federal government. What’s more, it makes Bai (and Simpson, who has made the same argument on occasion) look like an idiot for his stupid Trust Fund metaphor, because the 27 years of solvency assumes full repayment of the Trust Fund. That would be the point of Slide 7, “Solvent as Long as the Trust Fund Has Assets.” Slide 10 also shows this. It may look “scary, scary, scary,” but it’s showing the completely normal data from the trustee’s report. Simpson must think we never saw that before. I think he hasn’t.
As for the best solution in the future, I hardly think the answer for the potential cuts in 27 years is to make cuts today. As Goss says on Slide 11, the current program structure is sustainable with adjustments. It’s far more sustainable than Medicare, Ag subsidies, or just about 100 other things in the budget. Goss continues, “Sustainable is what Americans want and are willing to pay for.”
Hardly anyone knows that the payroll tax which pays for Social Security is capped at $106,000. Even if we carved out up to, say, $300,000 and then continued the tax on up, to capture the amount of compensation – 90% – expected by the program at the outset, we would have filled the gap almost entirely. As for the rest, believing so strongly in a 27-year projection is kind of nuts. We didn’t budget for any other program in 1983 based on what would happen in 2010: only Social Security.
As Goss concludes on Slide 19: “No Need to “Bend” the Cost
Curve (% of GDP) for Social Security.” Medicare is clearly the bigger problem, and the changes in the Affordable Care Act only covered part of the job. If Simpson were in any way credible, he’d get to work, not only on a better overall health care system, which would lower Medicare costs concurrently, but the inefficiencies in the overall budget, like runaway defense spending, Ag subsidies, contracting and a host of other problems. Social Security, despite being a lower-order issue, seems like all this commission is going to deal with. And Simpson’s comments show a bias against the program as well as a lack of understanding about it. That’s why he should be fired, not for obscenity or anything else.