The Associated Press's timing couldn't have been better for those who still want to pretend that Social Security is really not in serious trouble. Stephen Ohlemacher's item ("Social Security to start cashing Uncle Sam's IOUs") originally appeared on Sunday, in the midst of most of the major college basketball conference tournament championships, then followed by the evening's announcement of the selections for the NCAA Division I Men's basketball tournament. (The AP has issued minor revisions several times since its original appearance, up to and including today.)
The wire service's timing, while convenient for the Washington establishment, as it minimizes the possibility of distractions from its statist health care obsession, couldn't have been worse for those of us who wish the American people would get a grip on the gravity of the situation -- which is why I saved this post for today.
What is about to occur is the event that as little as a year ago, according to the Social Security Trustees' 2009 Report, wasn't expected to arrive until 2016. Ohlemacher tells us that it's right here, right now, and gets the reporting right until his seventh paragraph (bolds are mine):
Social Security to start cashing Uncle Sam's IOUs
PARKERSBURG, W.Va. — The retirement nest egg of an entire generation is stashed away in this small town along the Ohio River: $2.5 trillion in IOUs from the federal government, payable to the Social Security Administration.
It's time to start cashing them in.
For more than two decades, Social Security collected more money in payroll taxes than it paid out in benefits — billions more each year.
Not anymore. This year, for the first time since the 1980s, when Congress last overhauled Social Security, the retirement program is projected to pay out more in benefits than it collects in taxes — nearly $29 billion more.
Sounds like a good time to start tapping the nest egg. Too bad the federal government already spent that money over the years on other programs, preferring to borrow from Social Security rather than foreign creditors. In return, the Treasury Department issued a stack of IOUs — in the form of Treasury bonds — which are kept in a nondescript office building just down the street from Parkersburg's municipal offices.
Now the government will have to borrow even more money, much of it abroad, to start paying back the IOUs, and the timing couldn't be worse. he government is projected to post a record $1.5 trillion budget deficit this year, followed by trillion dollar deficits for years to come.
Social Security's shortfall will not affect current benefits. As long as the IOUs last, benefits will keep flowing. ...
Despite the air of certainty, the last bolded sentence is not provably true. "Benefits will keep flowing" only as long as the government can continue to do what Ohlemacher mentioned in his previous paragraph, i.e., "borrow even more money" to redeem those IOUs. When even Secretary of State Hillary Clinton goes off-message and acknowledges that the nation's debt load has turned into a national security issue (i.e., we're hoping against hope that China and others won't use their leverage as creditors against us), it is clear that government's ability to keep going to the borrowing well is by no means certain. If it can't, something will have to give, and one of the "somethings" might have to be the current level of Social Security benefits.
Now the government that gave us a multitrillion-dollar Social Security obligation, an accompanying Medicare obligation that is almost five times higher, while compromising our national security, wants to micromanage all of the nation's health care. Only in the Beltway wonderland would such an idea even resemble making sense.
Cross-posted at BizzyBlog.com.
