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The beginning of the end?

March 20, 2010

I just came across Eric Raymond’s post about Social Security’s ‘fiscal event horizon’ today, where he links this AP story.

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.

The problem of Social Security holding only IOU’s instead of assets is hardly news. People have been pointing it out for years now. And if – like me – you nurtured some small hope about GWB’s move to reform Social Security, then you’ll be disappointed – but unsurprised – to see that we’re still standing in the middle of tracks while the locomotive bears down on us.

Social Security is only part of the problem. Medicare’s another; state pension funds are still another.

We can’t blame this wreck on the train. Many countries that have similar programs have faced similar crises and solved them: Chile and Australia come to mind. Why can’t we?

So it was a bit of a coincidence that a friend sent me a link to a video at Real Clear Politics yesterday. It’s a clip of Rep. Tom Perriello (D-VA) talking about entitlement spending. In the clip he says, “[…] if you don’t tie our hands, we will keep stealing.” See for yourself.

To hear a member of the majority party say this tells you all you need to know about its being a matter of fact. It’s straight from the horse’s mouth, folks: ain’t no "Republican name calling" going on here. (Not that it would matter; there are plenty of Republicans who supported the status quo that got us in this position.)

When are we going to do something about this?

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