From: Ron Gebhardtsbauer <gebhardtsbauer@actuary.org>
Subject: RE: The Big Picture
Contributor: PANELIST: Ron Gebhardtsbauer
Looks like a majority of the panelists (2 have responded so far) favor using some surplus to help Social Security. Of course, much of that surplus is Social Security's already, so I assume they are suggesting some additional surplus could go to Social Security too. That is the big difference between debates today and debates from 2 years ago. The surpluses give us some extra room to solve the problem. As several people have said, it's easier to fix the roof when the sun is out.
In addition, I think John had a great point when he noted that using surplus for Social Security has the added virtue in that it means that it won't be spent right away, and thus the public debt goes down. This creates a virtuous circle that picks up steam and keeps on decreasing public debt. The people who held the Tresaury bonds (US debt) are paid off, and then have to go looking for investments elsewhere. Since they will mostly invest it in the US private sector, it increases our National Savings which is real good for our economy, which again helps the virtuous circle keep going. If all of the surplus went to Social Security, a CBO report in January projected that US debt would be totally paid off by 2013. This will free up some money (about 3% of GDP) to pay for Social Security benefits and also some of the other government programs mentioned by Bob for another 10 years or so!
That said, I have to put a BIG CAVEAT in here. It is pretty optimistic to think that this will happen, because it will mean that we can't cut taxes or increase government programs. That will be pretty difficult to do. In fact, it looks like we will have an emergency spending bill for an additional $13 billion this year for Kosovo, etc. That is only 12% of our projected surplus this year, but I'll bet its not the last attempt to access the surplus. Remember, a billion here and a billion there, and eventually we get up to real money.
