Read Jacob Rese’s article at National Affairs.
Policymaking always requires a level of creativity, both to come up with new solutions to problems and to find ways to pay for those solutions. Oftentimes, however, this creativity results in fictions that we adopt for convenience and are then bound to perpetuate for the sake of politics. Such fictions ultimately constrain our policy options and lead to misinformed, sometimes damaging policy choices. Few such fictions have thrown a bigger wrench into the policymaking process than the existence of supposedly massive trust-fund reserves financing Social Security and Medicare, the very programs that threaten to drive our country into a debt crisis.
You check check out the whole article here.
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1 comment:
The whole point of accounting is to provide a numeric picture of reality. The Unified Budget treats SS like it is a slush fund. And he talks about the Trust Fund as a fiction.
Here is what the Trustees said in their 2015 report :
In particular, trust fund accounting accurately reflects the law, under which benefits cannot be paid in full on a timely basis after reserve depletion. In contrast, unified budget accounting assumes that full scheduled benefits will continue to be paid through transfers from the General Fund of the Treasury, thus representing “a draw on other Federal resources for which there is no earmarked source of revenue from the public.” Not only are such “draws” not permissible under the law, no precedent exists for a change in the Social Security Act to finance unfunded trust fund obligations with such draws on other Federal resources. Under this unified budget accounting assumption, $10.7 trillion of OASDI unfunded obligations, which are not payable under the law over the next 75 years, are referred to as “expenditures” requiring a “draw” from the General Fund of the Treasury.
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