Liberals routinely accuse conservatives of living in an ideological policy bubble divorced from reality -- blasting, for instance, the idea that "tax cuts pay for themselves." But liberals put on their own ideological blinders at times. One good example is the idea that Social Security has no effect on the deficit. And just as conservatives pressure Republicans into embracing tax orthodoxy, liberals pressure Democrats into a similarly rigid position on Social Security.
In the fall 2007, when then-candidate Barack Obama criticized his primary opponent Hillary Clinton for not having a plan to address what he termed the "Social Security crisis," liberals swiftly attacked him. In a series of blog posts and a column, Paul Krugman excoriated Obama as a "sucker" who was "out of touch" and "desperately seeking approval from Beltway insiders."
There are a number of organizations on the Left that exist to protect Social Security from any kind of changes, and they perpetuate the idea that the program is perfectly fine. During the Obama administration, these groups have been on high alert for any sign Obama would be willing to sell out. At liberal conferences during 2010, it was common for speakers to voice the growing fear that Obama was using the creation of a fiscal commission as a pretext to slash Social Security.
Obama clearly got the message. Though there were reports that Obama flirted with restraining growth in Social Security benefits during last year's debt ceiling talks with House Speaker John Boehner, the president has never actually proposed reforms to Social Security. And on Monday, White House spokesman Jay Carney affirmed that Social Security would have no part in any sort of debt deal. "We should address the drivers of the deficit, and Social Security is not currently a driver of the deficit," he said.
It's one thing to argue that growing health care costs make Medicare and Medicaid a more daunting long-term fiscal challenge. But to say Social Security isn't a driver of the debt is to ignore math and huddle in a state of liberal denialism.
More money is spent on Social Security than on any other single program in the federal budget, including all defense spending. By 2022, nearly 25 percent of federal spending will be devoted to Social Security, according to the Congressional Budget Office, up from 20 percent last year. In contrast, even if Congress votes next month to avert automatic defense cuts, the share of the budget devoted to defense spending is projected to shrink from 19 percent in 2011 to 12 percent by 2022.
All told, the federal government will spend $10.5 trillion on Social Security over the next decade (2013 to 2022), according to the Congressional Budget Office. To say this will have no effect on deficits is preposterous on its face.
Defenders of Social Security would argue that because the program has a theoretically dedicated revenue stream in the form of payroll taxes, it doesn't really add to the debt burden. There are a number of reasons why this reasoning is flawed.
To start, in practice, money raised by payroll taxes is used to finance all government spending, not just Social Security. But beyond that, it's important to consider the tradeoffs involved with imposing a 12.4 percent payroll tax on the economy (split between workers and employers).
If there were no payroll tax, the government could raise income taxes or other forms of taxes to help pay for government spending. It would be cheaper for employers to hire and maintain workers, which would translate into some combination of higher salaries, greater employment and increased corporate profits. Any one of these developments would open up more income to taxation. It's also worth noting that because Americans aren't subject to payroll taxes on income over $110,000, the tax falls disproportionately on the middle class.
Without getting into the specifics of how to reform the program, it's simply a fact that if the federal government spent less money on Social Security, it would reduce the nation's debt burden.
Philip Klein (email@example.com) is a senior editorial writer for The Washington Examiner. Follow him on Twitter at @philipaklein.