At the first presidential debate on October 3, aka Barack Obama’s Denver Debacle, the president, when asked by moderator Jim Lehrer whether he saw a major difference between his position and that of Republican challenger Mitt Romney on Social Security, gave this response: “I suspect that, on Social Security, we’ve got a somewhat similar position. Social Security is structurally sound.”
At last Thursday’s vice-presidential debate, incumbent Joe Biden, who probably set new all-time debate records for rude, obnoxious, interrupting, and inappropriate behavior, clearly believed he was scoring political points — and unfortunately probably did — when he told challenger Paul Ryan that “if we had listened to Romney … and the congressman during the Bush years, imagine where all those seniors would be now if their money had been in the market.”
Though both members of the GOP ticket won their respective debates on substance, each wasted an important opportunity to more fully inform the public about how the Obama-Biden administration’s historically awful economic stewardship hastened the arrival of Social Security’s currently dire circumstances, and how partial privatization can still, even at this late date, be a factor in saving it.
Contrary to what the president claimed, Social Security is not “structurally sound.” Vice-presidential debate moderator Martha Raddatz, who apparently never told the presidential debate commission which selected her that Obama attended her 1991 wedding, and who to absolutely no one’s surprise ended up being a de facto third debater Thursday, probably thought she was making a daring statement when she said that it’s “going broke.” No ma’am; it already is.
Five years ago, Social Security was taking in over $180 billion a year more in taxes than it was spending on benefits and administration. Though that annual surplus was doomed to dwindle as the wave of baby boomers began to retire, Social Security’s trustees estimated that surpluses would continue for another decade, and that triple-digit cash deficits wouldn’t arrive until many years after that.
That’s before the Community Reinvestment Act-driven, Fannie Mae and Freddie Mac fraud-accelerated recession kicked in, followed by the worst so-called recovery since the Great Depression. Just a few years later, the system began running annual cash deficits. The trustees now estimate that the calendar year 2012 cash deficit (i.e., “the deficit of tax income relative to cost”) will be $165 billion. The only reason it won’t approach $300 billion is that the rest of the government is kicking in about $120 billion to offset the current-year effect of the two-point reduction in payroll tax withholding which took effect in 2011. Team Obama dishonestly demagogued against allowing that unsustainable reduction to expire earlier this year. Regardless of who wins the presidency for the next four years, and despite the soaring national debt which threatens to swallow the entire economy, restoring Social Security withholding to its prior 6.2% level will be extraordinarily difficult.
Well, that’s okay, because Social Security’s “trust fund” assets will cover those annual cash deficits for many years to come, right?