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Democrats Renew Their War on America’s Youth

With election year at hand, Democrats and their liberal allies are back to scaring seniors and denying there’s a Social Security crisis.

By 7.20.10

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Facing dangerously low approval ratings for an incumbent, Senate Majority Leader Harry Reid has turned to an age-old tactic in his bid for re-election: scaring senior citizens.

As soon as Sharron Angle emerged as his Republican opponent, Reid made Angle’s professed support for personal retirement accounts a centerpiece of his campaign against her, launching a series of ads blasting her for wanting to “wipe out” Social Security. 

Reid’s gambit to defend his seat in a state with the nation’s highest unemployment rate is part of a broader effort by Democrats to navigate a difficult electoral environment. With a weak economy and a public that has turned against President Obama and his agenda, Reid and his fellow Democratic incumbents are trying to resurrect their glory days, when they were the only ones standing in the way of President Bush’s sinister plot to destroy the popular but fiscally unsound government program.

The strategy was telegraphed in late January, when Obama cited Rep. Paul Ryan’s “Roadmap for America's Future” entitlement reform plan in his talk at the House Republican retreat as a “serious proposal” that he nonetheless opposed. Soon after, the Democratic National Committee pounced on the plan and leading Democrats argued that because Ryan was the ranking GOP member on the Budget Committee, it showed that Republicans wanted to “privatize” Social Security.

The weak-kneed Republican leadership has mostly distanced themselves from Ryan’s ambitious plan, emphasizing that it wasn’t the official Republican budget. And in the midst of campaign season, any GOP candidate who has indicated support for Ryan’s proposal has been subjected to relentless attacks.

In the race for Wisconsin’s 7th Congressional seat, for instance, Democrat Julie Lassa has blasted Republican Sean Duffy for making general statements in support of Ryan’s plan, which calls for voluntary personal accounts for younger workers and other changes to make the Social Security system solvent.

The campaign season debate over Social Security is set against the backdrop of Obama’s fiscal commission. While conservatives are convinced that the body is just a Trojan Horse for a European style value added tax, liberal activists are worried that it’s part of a plan to cut Social Security.

Last Wednesday, the liberal group MoveOn.org sent out an email seeking to raise $185,000 to launch a preemptive campaign against any efforts to cut Social Security. The ominous email warned of a “showdown coming to Washington” over Social Security, with conservatives and Blue Dog Democrats on one side, and “progressives” on the other. As of this writing MoveOn had raised $192,489, and had set a new goal of $250,000.

As part of the effort to avert any serious attempts to do something about the looming Social Security crisis, liberals have sought to deny any crisis exists in the first place.

Nancy Altman, co-director of the group Social Security Works, a coalition of unions and other liberal activist organizations, argued that “Deficit hawks plotting to cut Social Security to reduce the deficit are seriously misguided. The truth is that Social Security contributes not a single penny to the deficit. Indeed, it is the poster child for fiscal responsibility.”

“Social Security is not in crisis,” declared AARP President Barry Rand in May, urging the deficit commission to avoid addressing the program.

At last month’s Nevada Democratic Convention, Reid got into the act, too. "One of the myths around here is Social Security is in deep trouble,” Reid said, according to the Las Vegas Review-Journal. “Social Security is not in deep trouble. If we did nothing with it, it would be OK for the next 40 years. Now we want to make sure it is OK for the next 40 years."

Those who deny that Social Security is facing a crisis rely on a series of specious arguments. The first is to put the focus on 2037 -- the year the Social Security Trustees project the program’s “trust fund” to be exhausted, rather than 2016, when the program is expected to start running annual deficits. But to draw such a distinction is to pretend that all of the money doesn’t ultimately come from the same bank account (or in this case, the collective bank accounts of American taxpayers).

The Social Security program is financed primarily by payroll taxes. When the amount of tax revenue collected exceeds benefits, the surplus is theoretically put in the trust fund. But in reality, the federal government uses that surplus to finance ongoing government operations, and puts a stack of bonds -- or IOUs -- in the funds instead. So, while it’s true that for about 27 years, there’s theoretically enough money within the system to keep paying beneficiaries, after 2016, that money will have to come from somewhere -- at a time when the nation is already suffocating under a mountain of debt.

The 2009 Social Security Trustees report concluded that because redeeming bonds held within the trust fund will need to come from the general treasury, “Pressures on the Federal Budget will thus emerge well before 2037.”

Further along these lines, the Congressional Budget Office, in a report released earlier this month, wrote that the government bonds held within the trust fund, “are an asset to the Social Security system but a liability to the rest of the government. The resources to redeem government securities in the (Old age, Survivors, and Disability Insurance) trust funds and thereby pay for Social Security benefits in some future year must be generated from taxes, other government income, or government borrowing in that year.”

Specifically, the CBO estimates that by 2020, Social Security will be running a deficit of 0.3 percent of GDP. If you were to apply that percentage to 2009’s GDP -- the most recent year for which actual data is available -- it would represent $42.7 billion. That’s roughly the equivalent of the entire budget of the Department of Homeland Security. And between 2020 and 2040, that deficit is projected to more than quadruple, to 1.3 percent of GDP, or $185 billion if translated into 2009 GDP terms.

Not having a plan to fix the Social Security crisis also makes the bond markets more nervous, which could drive up the government's borrowing costs in the short term.

The other argument made by those who deny a Social Security crisis is that the real crisis is the one facing Medicare and Medicaid due to rising health care costs. It’s undeniable that the health care spending crisis is worse (and that’s been further exacerbated by the passage of the national health care law). But that says more about the severity of the problems facing Medicare and Medicaid than about the solvency of Social Security.

"There can be some tweaks done," Reid himself said. "Stop trying to frighten people about Social Security."

While it is true that Social Security lends itself to a combination of smaller fixes such as raising the retirement age, limiting payouts to wealthier retirees who don’t depend on Social Security for their livelihoods, or pegging the growth in benefits to a lower rate of inflation, anybody who proposes such fixes is typically subjected to the same sort of attacks that Reid has been leveling against Angle. And the longer action is delayed, the more drastic the solution will need to be.

Interestingly, during the campaign, Obama’s proposal for Social Security was to slap those earning more than $250,000 with an additional payroll tax (right now, payroll taxes only affect salary up to $106,800). The problem is, Democrats already dipped into that well when they introduced a similar tax to fund ObamaCare.

Those who seek to preserve the unsustainable status quo in Social Security like to see themselves as defenders of senior citizens. In reality, they’ve declared war against America’s youth. If there's any hope for putting the nation on a sustainable fiscal path, this will have to be proven a failed political strategy.

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Philip Klein is The American Spectator's Washington correspondent. You can follow him on Twitter at: http://twitter.com/Philipaklein