The graphic above actually has lots of lessons but I want to focus on year end balances in Social Security. The Table is taken from CBO's 2012 Budget and Economic Outlook. In a previous post I showed that increases in Social Security Trust Fund balances result in increases in Intragovernmental Holdings which results in an increase in Total Public Debt. But the equally serve to REDUCE deficits under standard CBO scoring rules. More below the squiggle.
From the Table we can see that the Social Security Old Age & Survivor's Trust Fund is projected to increase from a year end 2011 total of $2.493 trillion to a 2021 peak of $3.001 tn before dropping fractionally to $2.991 trillion by year end 2022 and the end of the 10 year scoring window. But even with that last year drop we are looking at a 10 year increase in assets in OAS of $498 billion. Every dollar of which scores as a reduction in cumulative deficits. (Though oddly scores as that same amount of extra debt).
Now there are caveats and extra context here, but if we take the same view that the CBO scorers do, workers via past contributions to their retirement system and earnings thereon are ponying up HALF A TRILLION DOLLARS in deficit reduction over the next ten years. That is whatever problems there are with 'Entitlements' generally, exactly zero of that has to do with RETIREMENT checks of the Greedy Geezers in their Lexus's. Now certainly you can boost that 10 year surplus by cutting Gramma's check, but that doesn't mean that Gramma's past checks or Great-Gramma's past checks or Gramma's checks in the next 10 years are in any way the source of the problem or should be the source of the solution. Social Security Retirement has been reducing the deficit since 1983 and will continue to do so until 2021. And even when it starts scoring on the other side of the ledger, it will start slow and after all only represent repayment of principal and interest used to offset other deficits for a whole generation.
Now longer term there are two problems with OAS. On the one hand no matter how equitable and fair the concept of repaying debt may be, and the answer to that is "pretty God Damn fair and Hella equitable", the money does have to come from somewhere. Moreover some thirteen years after Social Security starts contributing to deficits via Trust Fund pay down, the Trust Fund is in fact totally paid down resulting in a sudden mismatch between Scheduled and Payable Benefits and so a cutback from the former to the latter. And as it turns out there is a whole range of Policy Options to deal with both problems. But there is exactly nothing in the numbers to suggest that the short term response to a HALF A TRILLION 10 YEAR SURPLUS is immediate benefit cuts for seniors that ARE NO PART OF THE PROBLEM.
Okay, now for the caveats. That same Table shows that the Social Security Disability Trust Fund is well and truly broken. And in fact if we pulled back a little and looked at past numbers we would see that it actually broke in 2005. But in the very nature of things you can't Privatize DI, beneficiaries simply wouldn't have time to self-fund. Moreover it is harder to demonize quadraplegics (who after all might be Gen-Xers after a motorcycle accident) than Greedy Boomer Geezers. So instead of taking steps to fix what was broken (DI) we have seen an all-out assault on what ISN'T broken (OAS) and whose long term vulnerability to breakage need not come in the form of immediate benefit cuts.
To recap the series of posts this week: Cutting Social Security benefits actually serves to increase Debt Subject to the Limit so dragging it into a Debt Limit discussion makes no sense at all. Social Security has been running and will continue to run surpluses for almost the whole of the Ten Year Budget window used by CBO and OMB to score spending and tax legislation. For a cumulative HALF A TRILLION DOLLARS. While we could drag it in to a deficit discussion the only real reason to do so would be to kick the olds to save a few bucks for the top 1%, there is no higher principle involved and they certainly aren't doing it "for the grandchildren". Except maybe PGP's grandkid via estate tax 'reform'.
Social Security DOES contribute to the deficit. By having REDUCED IT by a cumulative $2.5 trillion since 1983 and by projecting to continue to reduce it by an additional $0.5 trillion over the official scoring window. How it somehow became the problem is a tribute to innumeracy if nothing else.