Paul M. Craig: The truth about Social Security may have emerged
To the editor:
An important Social Security truth might have emerged from the debate over lifting the national debt limit — if anyone asked the right question. Here it is: If there is all that money in the Social Security trust funds, why would there be any problem making benefit payments?
President Obama and Treasury Secretary Lew, with many others, told us if the debt ceiling wasn’t lifted, Social Security benefits might not be paid. But we have been continually assured that Social Security was solvent — that is, can pay benefits — at least until the mid-2030s. We have been told that there is plenty of money in the trust funds to continue to make benefit payments.
So, why would any politician or pundit tell us benefits might not be paid unless the debt ceiling — that is, authority for the government to borrow money that would increase the amount of the national debt — were lifted?
The truth is that the Social Security trust funds hold no money in them. They are not a stash of cash that can be used to pay benefits (and system operating costs).
What the trust funds do provide is Budget Authority to draw money from the U.S. Treasury to make the required benefit and administrative cost payments. But, if there is insufficient money in the U.S. Treasury, and the government cannot borrow money to make up the shortfall, benefits cannot be paid no matter the amount of the Social Security trust funds balance.
Despite all the dire warnings, failure to pay benefits is not a default or a stain on the full faith and credit of the United States. Why? Because Congress already has the authority to “alter,amend or repeal” Social Security benefit payments anytime it wants or needs to.
Paul M. Craig