Current Party Proposals: Make the Xers pay for it

[Reed Davis <rdavis2@ix.netcom.com>]

Gerry Shea wrote:
>
>         As a first step, Congress should commit to appropriating a
> significant portion of unified budget surpluses for Social Security.
> The President, for example, has proposed contributing roughly 62 percent
> of total unified budget surpluses over the next 15 years (about $2.8
> trillion) to the Social Security trust funds.  The Social Security
> actuaries (the staff experts at the Social Security Administration who
> are projecting the system's revenue shortfall beginning in 2034) have
> said that this step alone would extend the date until which Social
> Security can pay full benefits from 2034 until 2052.
>
  I disagree.  Clinton's proposal is functionally equivalent to writing
Social Security a check that is to be honored by future taxpayers starting
in 2034.  The surplus is just used as a cover for this postdated check.
Of the $2.8 trillion gift to Social Security, about $2.1 trillion will be
invested in gov't bonds, returning the money to the government which will
presumedly spend it the same as if no transaction had taken place.  The
only thing accomplished will be that the government will now owe Social
Security an additional $2.1 trillion.  In contrast, the other $700 million
(to be invested in the market) will cause the debt to the public to be
higher than it would be otherwise.  This is because, under current law,
it would have been used to pay down the public debt.  This general formula
is supported by Clinton's own numbers from the latest U.S. Budget (see
http://people.delphi.com/rd100/ssreform.html ).

  The Archer/Shaw Social Security Guarantee Plan is similar in that it
guarantees the current benefit structure using general revenues.  The
plan does not specify any tax hikes or spending cuts to make up for these
lost revenues so I suspect that the cost will be added to the debt, same
as Clinton's plan.  I requested the debt estimates for the Archer/Shaw Plan
from Representative Archer on the "Why Reform Now" forum on Saturday but
have not yet gotten a response.

  Hence, we now have a "let's make the Xer's pay for it" proposal from
both parties.  Or as Eugene Steurle said in recent testimony before the
Committee on Finance, "It is ironic that the legacy that baby boomers
would now bequeath is one in which almost the sole purpose of the federal
government would be to care for their own consumption needs in retirement."
I can only hope that this legacy will not come about and that we Boomers
will share in the burden of fixing Social Security.

Reed Davis