To my interlocutors:
Let us be grownups. What is social security? There are ss taxes, and ss
expenditures. For all practical matter, they have nothing to do with each
other. SS taxes go into the treasury and are spent how Congress wants to spend
the money. For years, ss taxes exceeded ss expenditures, so Congress could
happily spend the surpluses on unrelated expenditures, while going through the
fiction that the surplus created an asset/debt between the SSA and the US
Treasury.
At some point in time, if we continue on our present path, ss expenditures will
exceed ss taxes. At this point, general tax revenues are supposed to start
paying ss expenditures (i.e. pay those T-bills the SSA is supposedly holding).
This, tautologically, means that the Congress will have to reduce or eliminate
non-ss expenditures that would have been funded in the absence of the ss
obligation, unless Congress is willing to raise non-ss taxes.
I do not know how Congress is going to act at this point. Maybe there will be
no reaction -- people will nonchalantly accept tax increases or budget cuts in
other areas. It is possible, But one possibility, if not probability, is that
Congress will choose to "reformulate" the calculation of ss expenditures to
reduce the ss expenditures. This reformulation will be the functional
equivalent of defaulting on all of those T-bills the SSA is supposedly holding
-- if the T-bills were paid, there would be no need for reformulation.
I am all for "insurance against poverty," whatever that means. I don't believe
that is what social security as presently constituted is. It is simply a
scheme to increase present government revenues to pay for present government
expenditures. When it stops being a net contributor to revenues, the Congress
is going to do something relatively dramatic. Only time will tell.
David Shemano
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