In an attempt to strike fear in the hearts and minds of Americans, President Barack Obama recently said he could not guarantee that Social Security checks would go out on Aug. 3 unless the nation’s debt ceiling is raised.
The president hopes that we will be more afraid of losing our benefits than we are of the out-of-control government spending that’s jeopardizing our nation’s future. Unfortunately, the president did not tell the American people the truth: Obama can absolutely guarantee and promise that all Social Security checks will go out.
Social Security currently takes in about $55 billion each month and pays out about $60 billion. But while the system is cash-flow negative (and will be for the next 26 years), it is sitting on almost $2.7 trillion in trust fund reserves. These reserves take the form of nonmarketable government debt securities — securities that count toward our $14.3 trillion federal debt.
Although these debt securities cannot be used to make payments directly to Social Security beneficiaries, they can be redeemed so the government could borrow an equal amount of cash from the public with which to pay benefits.
By doing so, the debt held by Social Security would decrease and the debt held by the public would increase — leaving plenty of cash to pay benefits and no net increase in the debt ceiling. Furthermore, the president could guarantee benefit payments for years, regardless of the debt ceiling.
Of course, this seems very complicated compared with the basic fear the president tried to create with his statement. Which raises the question, why would the president make such a statement in the middle of debt-ceiling negotiations?
The answer is easy: Obama is trying everything he can to raise taxes and spend even more of our hard-earned money. Simply put, the president wants to raise taxes again, on top of the $520 billion he raised last year with his government-run health-care plan. And although the president has made overtures that he is willing to reduce some spending, his actions since taking office show that when he has the choice of spending more or spending less, more spending wins out.
In his first year in office alone, Obama tripled the national deficit. His nearly $1 trillion stimulus plan did not create jobs; it just created debt. And now our unemployment rate is soaring at 9.2 percent and our children are $45,000 in debt. However, there is a better way.
The “Cut, Cap, and Balance” proposal offered in Congress would cut spending this year, provide a hard cap for expenditures in the future and pass a balanced-budget amendment to the Constitution so Americans don’t constantly face mounds of red ink.