Who pays for upper-class party?
I really dislike making this personal, but someone owes me $1.8 trillion.
Not wanting to be nasty about it, I’ll take a check.
By me, of course, I mean everybody working and paying Social Security payroll taxes since 1983. And by a check, of course, I mean millions and millions of checks.
I am reminded of this debt — I know I’ve got the IOU somewhere — by President Bush’s reappointment this week of Federal Reserve chief Alan Greenspan, who seems to have forgotten it.
In February, Greenspan issued a pronouncement to the House Budget Committee, in his godlike way, that Social Security was running out of money, and Congress should start cutting benefits as soon as possible. “I am just basically saying,” he told the committee — in one of those Greenspan statements accompanied by incense, tinkling bells and background chanting — “that we are overcommitted at this stage.”
And it’s true that things are tight — except, of course, for Social Security’s spare $1.8 trillion.
Maybe Greenspan needs to check his files for the money. Maybe he microfilmed it.
In 1982, when Social Security was in an immediate financial crisis, President Reagan and Congress set up the National Commission on Social Security Reform — chaired, of course, by Alan Greenspan, although at the time he was just a demigod. The commission’s proposals raised the Social Security retirement age gradually to 67, and raised payroll taxes to a much higher level than needed to pay out benefits.
The extra money, it explained, would be squirrelled away to strengthen Social Security against the distant time, then 25 years in the future — around the time when Greenspan, even more godlike in his 90s, will be reappointed yet again by President Hillary Clinton — when the program would not be bringing in enough payroll taxes to cover the costs of retiring baby boomers.
And so, in 1983, Congress scurried to follow Greenspan’s dictates, and Americans began paying much higher payroll taxes than the system needed.
And for a decade, hundreds of billions of dollars in excess Social Security revenue was used to make budget deficits of Reagan and Bush the elder look only massive, as opposed to huge beyond imagination. But by the end of the ‘90s, the Social Security money was helping to nudge the federal budget into surplus, and the surpluses were projected to go on indefinitely.
So Bill Clinton looked at the projected surpluses and declared, “Save Social Security first.”
But then George W. Bush looked at the projected surpluses and declared, “Party!”
True, it was a fairly exclusive party, with the great bulk of tax cuts going to upper-income taxpayers, with people in the top 1 percent doing especially well. But in 2001, there was Alan Greenspan wearing a party hat, warning that without Bush’s big tax cuts, the government might bring in so much money it would pay off the entire federal debt too fast.
Turns out that wasn’t the problem.
Still, it’s been a very expensive party, with huge deficits now extending as far as the eye can see. And once again, Social Security surpluses are being used to downplay Bush deficits: This year, the federal government is short $375 billion, and it’s kept that low only by a Social Security surplus of $160 billion.
So Social Security payroll taxpayers are paying for the Bush administration’s upper-class party. And Alan Greenspan tells them that their future benefits need to be cut, and their $1.8 trillion — much more by the end of this decade — should just be written off.
“Compounding the audacity of that suggestion,” says Marilyn Watkins, policy director of the Economic Opportunity Institute in Seattle, “is that payroll taxes are paid by people of low and moderate income.”
And they’re not invited to the party.
Of course, nobody wants to get political about this, and nobody wants to argue with a god.
So just give me my $1.8 trillion, and we’ll forget it.