Chief actuary — and Bush — warn of impending Social Security challenges
Stephen Goss, the nonpartisan chief actuary of the Social Security Administration, says the nation will face a pinch in 2009 when excess payroll taxes that have been flowing into the program start to decline, halting the growth of surplus money that Congress has been tapping to fund other government programs.
It’s a warning that Bush is counseling fellow Republicans to heed if they want to avoid blowback from voters.
Goss and the Social Security Administration project the program can continue paying currently scheduled benefits until 2041, using the IOUs that Congress has been giving the program since it started spending the excess tax revenue in the 1980s.
Lawmakers would likely have to decide between budget cuts or tax increases that will only grow more severe each year until 2017, when all the surplus revenues end and the program begins paying out more in benefits than it generates in payroll taxes. That shift would force Social Security to begin cashing in the IOUs, further increasing the nation’s financial challenges.
“While there is no question that these securities will be redeemed when needed, as is now the case with the Medicare Trust Fund, this redemption will require the federal government to increase taxes, lower expenditures or issue publicly held debt in amounts equal to the net redemptions by the trust funds,” Goss told the House Way and Means Social Security subcommittee on Tuesday.
The Senate Finance Committee was scheduled to discuss the topic Wednesday.
Rep. Richard Neal, D-Mass., accused the Bush administration of hyping the problem.
“Back in Boston, people are saying, `Can you imagine Paul Revere traveling through the streets of Boston announcing, `The British are coming — in 40 years,'” Neal said at a House Ways and Means Committee hearing, one of two in Congress this week, that featured strongly opposed views of the urgency of Social Security’s problems.
Rep. Earl Pomeroy, D-N.D., challenged the accuracy of the actuary’s long-term projections, saying, “It’s kind of like the weather: Weather forecasting for the next hours, pretty good; tomorrow, a bit dicey; and next week, fairly iffy.”
Yet a Republican member of the panel, Rep. Kenny Hulshof of Missouri, suggested Neal alter his patriotic metaphor because “the red ink is coming, the red ink is coming.”
Neal shot back, “Would you say, `The red ink is coming — in 42 years’?”
Bush, whose ideas have not sold well to Democrats or moderate Republicans, has urged the GOP to support him and to resist pressure from constituents. He proposed letting workers under the age of 55 set up investment accounts to partially fund their future benefits, as well as slowing the growth of the traditional benefit check for all but the poorest workers by changing the method in which that growth is calculated.
“I think more and more people recognize there’s a problem and people are going to say, `Go do something about it,'” Bush told an audience in Greece, N.Y. “And those who obstruct reform — no matter what party they’re in — will pay a political price, in my judgment.”
The community is in the district of Rep. Tom Reynolds, R-N.Y., one of several House members from the state who have been under pressure from citizen and labor groups that oppose Bush’s ideas.
During his 2004 congressional race, Reynolds attacked his Democratic challenger, Jack Davis, for saying that “some changes are going to have to be made” in Social Security. Reynolds, a Bush supporter and Republican fundraiser, now says he respects the president’s willingness to take on the issue. Reynolds has refrained, though, from coming out directly in favor of Bush’s ideas.