Social Security and the Federal Budget

[Andre Dermant <adseale@aol.com>]

There is a great deal of controversy as to the best way to be sure
that the FICA taxes (Social Security taxes) are used ONLY to "Save
Social Security first". At this time, there is NO clear-cut way
for the Federal Government to earmark the Social Security surplus
stricly for that purpose. An excellent article that discuss this
topic was published in a local newspaper:

BREAKING SOCIAL SECURITY VOWS
The Wichita Eagle, Apr. 3, '99
by Phillip Brownlee

Promises by President Clinton and GOP leaders not to spend excess
Social Security revenue may sound good. But based on their past,
present and likely future actions related to "emergency spending,"
don't be surprised if they renege.

Despite his often repeated State-of-the-Union vow to "save Social
Security," Mr. Clinton joined the majority in Congress last year
in approving about $21 billion in so-called emergency spending.

Congress created the "emergency spending" category to allow
flexibility in paying unexpected expenses. These expenses are
considered off budget and, therefore, aren't subject to spending
caps set by the 1997 Balanced Budget Act.

While such accounting may be reasonable in some cases, most of what
Congress and Mr. Clinton classified as emergencies last year clearly
weren't unexpected. In other words, they deliberately misclassified
the expenses so as to avoid cutting spending elsewhere.

The result of this bookkeeping sleight of hand was that, despite
their pledges, Mr. Clinton and Congress spent a third of the surplus,
all of which was excess Social Security revenue.

Regrettably, Mr. Clinton and Congress are already trying another
surplus raid this year, as they are currently arguing about how to
pay for $1 billion in aid to Central American flood victims.

Mr. Clinton wants to classify the aid as emergency spending. To
their credit, House Republicans - spurred by Rep. Todd Tiahrt,
R-Kan. - have fought this, arguing that this spending should be
offset.

"You're choosing to take money from Social Security and send it
down to Central America," The Wall Street Journal quoted Mr. Tiahrt
as telling House Democrats. "The money has to come from somewhere."
Unfortunately, despite an amendment by Mr. Tiahrt to cover 100
percent of the costs, the House voted to offset only about 80
percent of the aid, meaning that $195 million would come from Social
Security money.  Mr. Clinton doesn't want any of these offsets and
has promised a veto.

The biggest threat to the Social Security surplus began last week,
however, with the bombings in Yugoslavia. Because the Defense
Department - as unbelievable as this sounds - doesn't budget for
conflicts,Congress will get a whopper of a bill without a plan for
how to pay for it.

Defense analysts predict that the cost of the bombing campaign
during the first 24 hours alone was more than $100 million. If the
bombing is successful in forcing Serbia to sign the peace agreement,
the U.S. costs of deploying peacekeeping troops could be as much
as $2 billion a year.

Guess where that money is likely to come from.

In addition to these big-ticket expenses, Congress and Mr. Clinton
are also likely to try to push smaller, less defensible items
through as emergency spending.

The Congressional Budget Office estimated, for example, that Mr.
Clinton's budget is $33 billion in excess of spending caps in fiscal
year 2000 and $116 billion in excess during the next five years.
He would finance this spending both through tax and fee increases
and Social Security funds.

Republicans, meanwhile, have endorsed a budget blueprint pledging
to live within the spending caps, which is great. The problem is
that some Republicans are reportedly already looking for ways to
shift some items on and off budget.

Because of the tremendous temptation to spend Social Security money,
the bipartisan budget watchdog group The Concord Coalition has
proposed tightening the definitions of what qualifies as an emergency.
Concord also advocates approving regular appropriations for
emergency-relief programs that seem to occur on a regular basis,
such as flood-victim assistance.

In a letter supporting Mr. Tiahrt's effort to require offsets for
the Central America aid, Concord's policy director, Robert Bixby,
correctly warned about the danger of going off budget.

"'Emergency' supplementals serve as a vehicle to evade budget
discipline, allowing spending above the legislated caps on
discretionary accounts," Mr. Bixby wrote." ... As last year's
Omnibus Appropriations bill demonstrates, tapping into the Social
Security surplus for emergencies only leads to a breakdown in fiscal
discipline."

It also leads to broken promises.