Here we go again. It’s time to pretend like we’re saving Social Security. Pardon me if I don’t get overly excited, but I’m a baby boomer who has seen Social Security "saved" for our lifetime before.
In fact, we seem to save it every 10 years or so. While one side suggests private investment accounts as the solution, the other feels we need to bring more money into the system. Honorable men and women are found on both sides of this debate, and they will make their cases passionately during the next year or two.
However, no matter where you stand on the solution to financing Social Security, the first thing we absolutely must do is stop putting the revenue collected for the program into the general revenue fund. Every year, we collect more money for Social Security than we pay out in benefits. But instead of setting aside (or, heaven forbid, investing) the difference, we spend it on other government needs.
| Social Security is an employment tax and, thus, a business expense. It doesn’t matter if a tax increase comes in the form of a higher rate or by increasing the maximum income subject to the Social Security tax, that business expense must be offset with “cuts” in other expenses. |
This isn’t new. We’ve been playing this slight-of-hand game ever since the 1960s, with both Republican and Democrat administrations and Congresses acting as equally enthusiastic partners in this financial shell game.
Neither side of the political debate wants to even acknowledge that spending the excess revenue collected for Social Security is the central problem.
The mere mention of a “lock box” for Social Security elicits riotous giggling from the political class and political pundits.
The only reason a “lock box” is funny is because everyone knows it is a figment of our imagination, and a useful one at that. That’s because we all know that restricting this revenue from flowing into the general fund would make the government’s funding crisis more immediate (i.e., this year, meaning it’s our problem) rather than more long term (i.e., 2025 or whenever, meaning it is someone else’s problem).
Clearly, this would create a political calamity, so it’s a lot easier to pretend it doesn’t exist than it would be to fix it. It’s much easier to hide behind images of grandma eating dog food so she can afford to pay for her medicine than it is to accept the fact that it isn’t Social Security that is the problem, it’s the fact that the money we collect today for the baby boomer retirement years is being spent as fast as it is being taken in.
What am I missing here? Why would we think that the solution to shoring up the finances of a system that already brings in more money than it pays out in benefits is to bring in even more money?
For most readers of this column, Social Security is probably not a major concern when it comes to their personal retirement income. However, it is a major concern as a business expense and a drag on employment. Whatever Congress and the administration decide, it’s going to come out of your pocket, either as a business or as an individual or, more likely, as both.
Social Security is an employment tax and, thus, a business expense. It doesn’t matter if a tax increase comes in the form of a higher rate or by increasing the maximum income subject to the Social Security tax, that business expense must be offset with “cuts” in other expenses. Whether those cuts come in the form of fewer employees or cuts to other spending areas or a combination of the two, they will definitely be made.
Somehow, we (us and our elected representatives) need to figure out a way to wean ourselves from the revenue we all intellectually, if not emotionally, know should be set aside as a safety net for our aging population. We as a society have a commitment that we need to stop trying to rationalize our way out of.
As a nation, we’re like a family that chooses to take vacations to Europe and the Pacific Islands rather than set aside that money for the kids’ college education.
Let’s own up to what the real problem is and give poor grandma’s fragile psyche a break.
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