Social Security: Is the ‘lockbox’ empty?

last updated 8 January 2015

“Leave Social Security alone.” That, says Peter Suderman in Reason.com, is Senate Majority Leader Harry Reid’s official position on Social Security, which he insisted last week is solvent for the next two decades, and will thus be shielded from budget cutting or entitlement reform. Apparently, he and his fellow Democrats don’t care that the system last year paid out $61 billion more than it received in payroll taxes, or that it faces “$15 trillion in long-term unfunded liabilities.” Democrats are still yapping about the fictional “lockbox,” said Charles Krauthammer in The Washington Post. The term, you’ll remember, comes from Al Gore’s 2000 campaign pledge to protect the Social Security Trust Fund, which since 1983 has built up $2.6 trillion to fund the baby boom retirement wave that is now upon us. Those funds have been “borrowed” and spent by the rapacious federal government, replaced in the lockbox by IOUs—meaningless pieces of paper. In reality, “there is nothing in the lockbox,” and Social Security is already running in the red.

This is a Republican scare tactic, whose ultimate goal is to privatize Social Security, said Paul Krugman in NYTimes.com. In reality, Social Security is not in any danger. Only if Congress votes “not to honor” the IOUs in the trust fund will the system be in trouble, and “that’s not going to happen.” The real issue is not Social Security per se, said Stephen Herrington in HuffingtonPost.com. It’s the amount of money the government raises through taxes. Since 1980, tax cuts instituted by Ronald Reagan and George W. Bush have cost the Treasury $8.25 trillion—“nearly all” the debt we’ve accumulated over that time. In effect, the GOP borrowed and spent the American people’s Social Security taxes so it could cut income taxes on the rich. Raise taxes on the rich, so the government can pay back its debts, and the Social Security “problem” goes away.

Forget the partisan bickering for a moment, said Tom Curry in MSNBC.com. It’s a simple, inarguable fact that the government has borrowed $2.6 trillion from Social Security that it won’t be able to pay back unless it borrows more money, at interest, from other lenders. That debt can be reduced if Congress cuts benefits and raises Social Security taxes. So do the math. Sooner or later, “the math is pointing to higher taxes and a reduction in future benefits.”