Sen. Richard Durbin, D-Ill., said in a speech and in a TV interview that Social Security doesn't increase the debt by even one penny. He is wrong. It adds 2,100 trillion pennies to debt calculated as all future obligations. That's enough, along with the enormous amounts of money owed to other entitlements, to press down the American future to the point of its being squashed, but never mind. Durbin has politics to tend to.
Those politics start with hiking taxes on annual incomes over $200,000 for individuals or $250,000 for couples because income inequality is immoral in his view. He should start sending me checks. I figure he makes more than I do, and I'd applaud that moral gesture a lot more than I favor increasing taxes in his foolish way. It would hinder job creation while raising so little extra revenue as to lessen future deficits something on the order of a smidgen.
Some of us might say the real immorality is to play these ideologically lame games when the country is facing a major debt crisis. It is especially harmful in negotiations on averting the so-called fiscal cliff to back away from significant entitlement cuts. Durbin's stance is to do nothing now about Social Security, which means failing to take advantage of a time when meaningful compromise seems possible. It thereby imitates past demagoguery that got us in the mess we're in.
While working in Washington, D.C., some 17 years ago, I heard the great, brilliant Sen. Daniel Patrick Moynihan, D-N.Y. — a since-deceased Social Security expert who was also my favorite liberal politician — talk about the need to act. But every time some bold member of Congress suggested some move in the right direction, some opportunistic self-server would say this was heartless, mean, awful, a way of forcing the elderly poor to eat dog food, or something like that. We are therefore now in a situation in which Social Security is in the red and adding billions to the deficit.
Fact-checkers and others tell us Social Security was in the red by $36 billion in 2010 and will have its annual payroll tax shortfalls rise as high as $86 billion by 2015. One commentator — columnist Robert Samuelson — observes that the total Social Security budget this year was $762 billion, compared with $651 billion for defense. Over the next 75 years, Social Security's unfunded liability — the amount by which obligations to recipients will exceed anticipated revenues -- is estimated by some at $21 trillion, money that would have to come from borrowing or higher taxes. A major reason is the extraordinary increase in the number of people older than 65 — some 30 million more than today's 40 million in less than another two decades.
My own sense is that President Barack Obama should long ago have embraced the Bowles-Simpson deficit-reducing recommendations made by the leaders of his own debt commission. They have sought both more revenue and serious spending cuts. Their approach to Social Security is nothing terribly hurtful -- steps such as reducing cost growth through a new formula on increases in initial benefits for the best off, increased payroll taxes from the highest earners, redoing the formula for inflation adjustments and higher eligibility ages way down the road.
I also like their tax reform plans. They would lower rates to engender growth at the same time they simplified taxes and increased revenues through elimination of the least excusable deductions.
For all the public squawking back and forth between Republicans and Democrats, there are some reported signals here and there that the two sides may be finding their way to a resolution to avoid the fiscal cliff. Durbin, who is Senate majority whip and has previously shown an exceptional willingness to compromise on Social Security and other issues, could be a major player in helping to save the nation from disaster. A first step would be to say Social Security does magnify the debt crisis, and by a whole lot more than a penny.