All major Social Security reforms were the product of Democrats and Republicans joining together to improve this landmark program.–Rep. Tom Reed (email, 9/21/19)
Social Security is based on non-partisan compromise; it is a very conservative retirement insurance program. Compromise was possible because legislators shared a common goal–workable retirement insurance for most Americans.
However, the Democrat Social Security Plan (H.R. 860) would raise taxes on hardworking people while a Congressional Budget Office report released last week says the plan will only achieve solvency for another nine years – not permanent solvency as advertised. (email)
Reed is wrong. The CBO report he cites doesn’t say what he says it does.
As shown in Table 1, CBO and JCT estimate that over the current baseline projection period (2020 to 2029), enactment of H.R. 860 would:
- Increase Social Security outlays by $386 billion;
- Increase federal revenues by $911 billion, the net effect of a decrease in on-budget revenues of $719 billion and an increase in off-budget revenues of $1.629 trillion; and
- Reduce the federal deficit by $525 billion (excluding any effects on direct spending for programs other than Social Security).
The discussion of on-budget and off-budget is confusing; there is more detail in the report. The CBO report continues:
In the long term, H.R. 860 would increase Social Security revenues more than it would increase benefits, nearly closing the funding shortfall that is currently projected. Under the bill, the 75-year summarized value of revenues would increase by 1.7 percent of gross domestic product (GDP), and the 75-year summarized value of outlays would increase by 0.3 percent of GDP, CBO estimates. The net effect of those changes would be to reduce the Social Security system’s 75-year actuarial deficit from 1.5 percent of GDP under current law to 0.1 percent under the bill (see Table 2).
This doesn’t sound bad. The report continues
At the end of the 75-year period in 2093, CBO projects, under H.R. 860, spending would increase by 0.4 percent of GDP and revenues would increase by 2.2 percent of GDP, compared with the amounts projected under current law. This would significantly reduce but not eliminate the annual gap between Social Security’s costs and its revenues. Under H.R. 860, that annual gap would be widening by the end of the 75-year period and would continue to widen thereafter, causing the program’s financial shortfall to increase in subsequent years.
The report notes that projections far into the future are uncertain. With this in mind 75 years of sustainability sounds rather good. Here is the section that Tom Reed misconstrues:
Under H.R. 860, the newly established Social Security Trust Fund would be exhausted in calendar year 2041. Under current law, CBO projects, the existing Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) trust funds will be exhausted in calendar year 2032 and fiscal year 2028, respectively. If their balances were combined, the OASDI trust funds would be exhausted in calendar year 2032. (Following common analytical conventions, CBO often considers the two trust funds as combined.)
Tom quotes predictions for current law which the CBO report says will be a concern in nine years, as if they applied to the proposed law: H.R. 860.
Is Tom, uninformed, careless, or disingenuous. What do readers think?