From time to time, your correspondent will take a reprieve from Marxist dick jokes to educate his faithful readership on a Very Serious Matter. This is one of those times when both major ‘Merican political parties are guilty of inconsistent logic at best, and at worst are having their cake and eating it with regard to the medium term fiscal direction of this failed nation.
Yesterday, the gross national debt breached an arbitrary figure: $16 trillion. That is one hell of a lot of money, and you can bet that every GOPee official with enough tech savvy to use Twitter was up in arms about how this portended one thousand years in the wilderness for Amerika if the spendthrift Kenyan Prime Minister Barack Hussein Obama should be reëlected.
That notion is not worth any further examination, and is conveniently not what is at issue here today. Rather, it is how each political party approaches the federal deficit and how those approaches relate to their policies regarding how Social Security should be funded.
Back in the late 1990s, the combination of partisan gridlock in the halls of power in DeeCee and an economy heated to the boiling point by inappropriately loose monetary policy caused the temporary operating surplus in the Social Security and Medicare “Trust Funds” to exceed the budget deficit in the government’s general purpose operations. From a consolidated standpoint, the federal gubmint ran a surplus, and you can bet that a certain Bill Clinton was happy to take credit for it.
HOWEVAH, the Democratic party likes to imagine that the financing of Social Security and Medicare is (or at least ought to be) separate and distinct from the rest of the federal government’s tax-financed operations. If that is true, there was never any budget surplus. If there was a surplus, the budgetary smoke and mirrors of the Social Security and Medicare Trust Funds are exposed as simply that. You cannot have it both ways.
To balance its budget Congress took money out of the Trust Funds and transferred it to the budget for general operations like the military, Medicaid, and so on, and gave the Trust Funds an I.O.U. So, the federal government owes money to itself to the tune of $6 trillion, which is baked into that aforementioned $16 trillion figure.
It is completely ludicrous of course, and no educated person pays attention to the gross debt. It is only the net debt (also known as the public debt) that matters, because Congress can wipe out the difference with an accounting entry. But if it did, the false edifice that underlies the Trust Fund would vanish completely, and Democrats don’t like that idea because it would probably make it easier to for Congress to reduce benefits in one or both programs.
On tha otha hand, the GOPee would like to reduce or eliminate altogether the payroll taxes that ostensibly support the Trust Funds, which would force Congress to treat Social Security and Medicare just like all other income tax-supported federal programs and have them compete for scarce resources. That can be debated on its merits, but its proponents cannot then argue that the $16 trillion gross debt figure means anything.
Unless they’re cynical.
This is one of those rare instances where your correspondent actually sides with the consolidated approach of the GOPee, if not their mindless empty symbolism. Payroll taxes are just regressive taxes on wage income, and old-age pensions are a fundamental ministerial duty of the government. Therefore, absent a rational budget process the formula-driven relative shares of spending on Social Security, Medicare, and everything else are inefficient with probability equal to 1. Creating budgetary auto-pilots for a large and growing share of federal receipts and outlays is just bad policy. Pretending otherwise is silly and allows both sides to obfuscate important budget issues for short term political gain.