Social Security's Implosion Continues
An indicator of just how seriously the federal government's financial situation has deteriorated (combined of course with the establishment press's clear desire to emphasize "news" which might assist Dear Leader's reelection effort) is that the dismal 2012 report released by the Social Security system's trustees on April 23 received little attention. Viewed through that perverse prism, cash deficits which "will average about $66 billion between 2012 and 2018 before rising steeply," even before considering the $110 billion or so taken from "general (non-existent) revenues" during 2011 and 2012 to make up for the payroll tax cut, pale in comparison to the importance of higher priorities -- like working up a 5,400-word report riddled with errors and distortions on what Mitt Romney was doing when he was a teenager.
The sad, under-reported truth is that three years into an alleged "recovery," the long-term outlook for Social Security continues to crumble at an accelerating rate.
It's a crackup which was decades in the making. That's because the government has scandalously used Social Security's annual surpluses to fund the rest of its operations since President Lyndon Johnson began "including Social Security and all other trust funds in a 'unified budget'" in the 1960s. Social Security's so-called "Trust Funds" consist of nothing more than stacks of IOUs from the rest of a dangerously indebted government.
During fiscal 2007, a mere five years ago, the system ran a cash surplus, as tax collections exceeded benefits paid and administrative costs by $186 billion. With the wave of baby boomer retirements looming on the horizon, everyone knew that these large annual surpluses couldn't and wouldn't last. In their 2008 report covering calendar 2007, the trustees projected that the system would begin paying out more in benefits than it collected in taxes in 2017; at that point, the rest of the government would have to start making up the difference.
Instead, annual surpluses virtually vanished just two years later, thanks to the onset of the POR (Pelosi-Obama-Reid) economy in roughly June of 2008. The Democratic Party's permissive home lending-driven, securities fraud-enabled recession, followed by the Obama administration's failure to choose policies which would have hastened a genuine recovery and acceptably grown the economy, brought things to a head with Social Security that much sooner. In the 2010 Trustees Report on 2009 results, tax collections were only $3 billion greater than benefits paid. 2010 went into the red by $49 billion, while 2011, after taking the payroll tax-cut reimbursements into account, had a deficit of $45 billion. After the 2012-2018 shorfalls cited earlier, annual cash deficits are projected to head quickly into the land of triple digits. If the economy doesn't start generating significant growth and job creation, they might even arrive as quickly as the first cash deficits.
A few years ago, the Social Security system going cash-negative, especially so quickly, might have triggered the recognition of a widely acknowledged crisis. I thought it would be treated as one in a column three years ago. It hasn't happened, even though its legitimacy as a genuine crisis is beyond reasonable dispute. Why not? I see only two reasons: A profoundly far-left Democratic administration, and a supportive and at least as far-left establishment press. This tipping point could not have occurred in a Republican or conservative presidential administration without the press and the left going into hysterics. If Barack Obama loses in November, I expect that the crisis will magically move to the front burner.
The left's abandonment of anything resembling common sense is proceeding at a rate at least as fast as the nation's fiscal meltdown. An ever-shrinking pool of liberals understands the basic notion that the perpetuation of their precious entitlement programs depends on a consistently robust economy to generate the tax collections necessary for its funding. Yet those who most vocally applaud the breakneck expansions of food stamps, wish to return to the traditional incentive-barren welfare as we once knew it before its reform in the mid-1990s, and most of all praise the inevitable cradle-to-grave control of health care inherent in ObamaCare, are among those who attack the nation's successful job and taxable income creators the most stridently. Where's the money for all of this government largesse going to come from if productive people -- more properly phrased, if even more of them than have done so already -- decide that working hard isn't worth it?
Bill Clinton, for all his considerable and impeachable faults, understood the fundamental importance of having a strong economy. That understanding enabled him to let go of HillaryCare in 1994, and ultimately convinced him after a great deal of kicking and screaming into acquiescing to welfare reform. These moves, combined with an ineffective opponent, ensured his reelection in 1996. Clinton signed on to a capital gains tax cut in 1997 and signed off on the GOP Congress's balanced budget plan formulated by then-Ohio Congressman John Kasich and pushed through by then-House Speaker Newt Gingrich. For better or worse (I believe worse, but that's for another day in another column), the booming economy which followed saved Clinton's presidency in 1999.
Barack Obama, his administration, and his core supporters either don't understand the importance of having a strong economy, or don't care to. If it's the former, they're merely dumber than a box of rocks and really believe that their regime of reckless spending, rhetorical excess, and regulatory overreach will be consequence-free in the long run.
It's far more probable that Obama and his inner circle know full well that they are wrecking the very entitlement programs they profess to love so dearly. They have convinced themselves that when it all falls apart and after the dust settles, they'll have their hands more firmly on the levers of power, which to them seems to be all that really matters. We obviously can't afford to test that belief, and we're running out of opportunities to prevent it.