Long Way To Go

Rep. Paul Kanjorski is strongly opposed to any attempt to privatize Social Security. In a somewhat surprising move, challenger Lou Barletta released a statement on Social Security essentially agreeing with Kanjorski.

Kanjorski is looking to expand Social Security benefits by increasing cost-of-living-adjustments and Barletta is ruling out most approaches to fixing it: privatization, an increase in the retirement age, and any benefits reductions.

Unfortunately, Barletta's dedication to fixing Social Security may be in rhetoric only. Assuming Barletta's opposition to benefit reductions also means he's ruling out a price indexing (which is tomorrow's benefits being able to buy the same basket of goods as today's benefits--this is different from the current wage indexing) of benefits, he's limiting his options for fixing Social Security. Strictly speaking, he must be looking to fix it through the revenue side of the equation.

In 2017, Social Security will begin to run cash deficits--spending more money than it takes in. Currently, the system is running surpluses since more people are paying into the system than are taking benefits. Once the boomers begin their wave of retirement that equation changes. The excess revenue is being used to pay other government bills and an IOU is left in the Trust Fund which is reflected in the "intragovernmental debt" as money the government owes to itself.

Thus in 2017, Social Security will begin to redeem securities in the Trust Fund to pay for the extra benefits. The Social Security Trust Fund bonds will have to be "redeemed" through the government's general revenue stream. This will mean less funding to pay for other priorities and a larger deficit if nothing is changed.

Therefore, if Barletta wants to ensure Social Security's long-term solvency, he must be considering an increase in the payroll tax. Simply telling the government to keep cash in the current Social Security Trust Fund will do little to alleviate the long-term obligations or produce solvency.

It's frustrating to see Barletta take options "off the table" this early in the campaign. Other proposals like what was offered from Fred Thompson or Republican Paul Ryan have successfully incorporated some of these non-starters for Barletta without drastically changing the nature of the program.