The tortured logic of the liberal left. Social Security doesn’t add to the deficit; there is no such thing as deficit; just raise taxes

The following is an excerpt from a LA Times article refuting a claim in a fact-checking site that Social Security adds to the deficit.

The basic facts are correct here, but the tortured logic is actually funny. All interest payments made by government add to the deficit and the fact one domestic plan that needs some changing is part of the equation does not change that fact. If interest payments go down, the deficit and debt decrease.

And yes, if we simply raise income and payroll taxes the deficit shrinks as long as spending is not increased and if we raise them sufficiently in excess of spending the debt decreases – good luck with that, not to mention other economic consequences. For example, the Social Security Trustees say it will take a 2.66% increase in the payroll tax to keep Social Security solvent.

The below article [link to full article] also claims the Trust Fund is growing (using selected time period). In fact, the Trust is making payments in excess of its revenue. Click here for the chart from the Trustees Report. The Trust only grows because all interest payments are not being used to pay benefits … yet‼️

The Trust has three basic sources of income. Incoming taxes, interest paid by the Treasury on the bonds held in the Trust and, if necessary redemption of the bonds it bought from Treasury. Today benefits are being paid using incoming taxes and some interest (they used to be paid using only a portion of incoming taxes which is how the Trust accumulated assets). In not too many years those two items will not cover the full benefit payments. At that point bonds will have to be redeemed. Note that income to the Trust also increases when wages increase, but so do the benefits for most people when that happens.

It’s true that by law benefits can’t be paid if there are no funds within the system. That’s why the Trustees talk about paying only 75% of earned benefits at some point in the not too distant future. But before we even get to that point the Treasury still has to raise the money so the Trust can redeem its bonds. The next time someone says Social Security does not impact the deficit or federal debt, ask them where the money comes from to pay interest and redeem the bonds. The real impact will come when Social Security bonds are redeemed to pay benefits.

Consider this from a CNN Money 2012 article:

Over the decade, more than 14% of all revenue the government is projected to collect will be sucked up by interest payments. That’s a lot of money that can’t be used on the country’s other priorities. Indeed, between 2013 and 2022, estimated interest costs will be:

🔻higher than Medicaid spending;
🔻equal to half of Social Security spending;
🔻close to what is spent on all of defense.

Why is this true? Because the government keeps adding to the debt by running deficits each year.

But hey, no problem … just raise taxes‼️

The extreme claims both left and right don’t help. The fact is changes are needed and or taxes must be raised to keep Social Security going. Read it all for yourself in the latest Trustees Report which you can Google or link to in a post under the Social Security category on Quinnscommentary.

With regard to the following, what contributes to the deficit is borrowing and paying interest on that debt … regardless of how the borrowed money is used and that includes Social Security. 

First of all, the government pays interest on Social Security’s Treasury bonds every year. It also pays interest every year on Series EE savings bonds, on T-bonds in millionaires’ portfolios and on T-bonds in China’s portfolio. None of those transactions in and of themselves can be defined as “contributing to the deficit”; you won’t hear serious economists, liberal or conservative, say that “China contributes to the deficit,” or “Warren Buffett contributes to the deficit” or “little Johnny who got savings bonds for his birthday contributes to the deficit” — for the very reason that those statements are untrue.

Nothing in the law says that Congress couldn’t fund any of those interest obligations by raising it from income taxes. If it raised taxes far enough, obviously, there wouldn’t be any deficit at all. Nothing in the law says that today’s tax rates are immutably carved in stone.

Obviously, what contributes to the federal deficit isn’t Social Security, but Congress’ failure to match inflow to outflow. But that’s entirely within Congress’ power to remedy, and has nothing whatsoever to do with whether Social Security uses interest income to cover benefits. The key to Social Security’s relationship to the federal budget is that, by law, the system can not spend more on benefits than it takes in from its legal revenue sources — the payroll tax, income taxes on Social Security benefits and interest on its assets. If it doesn’t get enough from those sources, then benefits have to be cut. Period. That’s what Merkley said, and he was right.

via A ‘fact-checking’ website doubles down on its Social Security errors – LA Times.