Some deficit hawks are after other prey

By Ted Marmor

The National Commission on Fiscal Responsibility and Reform appointed by President Obama is preoccupied with the federal government's growing fiscal deficit. So is America Speaks, a nonprofit group that held the first of a series of town-hall meetings on the subject in Philadelphia last weekend.

The general assumption is that reducing the deficit should be a top national objective, and that Social Security should be considered a major source of deficit relief. That much is simple enough. But little else about the campaign against deficits is so simple.

Two issues must be sharply separated. The first is the fiscal policy question of how long increased deficits can be prudently tolerated in the interests of stimulating the economy. The second issue, Social Security, is different - though one wouldn't know it from listening to most deficit hawks.

Government budget deficits are a serious problem, but Social Security is not a serious part of it. To say otherwise is to engage in mythmaking, and the deficit hawks are doing a lot of that. Those who warn that Social Security's revenues will fall short of outlays in the 2040s are really pointing to a need for small adjustments, not a problem with the program's solvency.

In recent years, deficits have grown sharply in other parts of the federal budget. But American workers have "saved" enough (through their Social Security taxes) to finance their retirement benefits as far as the eye can see clearly. Workers did their part, and the political consequences of not honoring those obligations are so staggering that it is unrealistic to discuss such a prospect.

Attacks on Social Security have been launched in various forms for decades, but many conservative commentators have not been prepared to directly question the desirability of social insurance programs. Instead, they have charged that such programs are ungovernable and, increasingly, unaffordable.

It is crucial to understand how devious such arguments are. They are ideological stances searching for plausible occasions to celebrate what they presume. This ploy is obvious in the case of Social Security pensions, which are not suffering worrisome fiscal imbalances now or later.

The deficit hawks say they are worried about future years - 2037 or 2042 - when there might be some shortfall in Social Security revenues against claims, according to the Congressional Budget Office. But why are they focusing on future decades when the near-term federal deficit is the problem?

For one thing, because distant specters generate present fears - all the more so when linked to plausible demographic forecasts. So the aging of the baby boomers is noted, as well as the falling ratio of workers to retirees.

These facts suggest that benefits will have to be reduced, or Social Security taxes increased. But this has nothing to do with current deficits. Moreover, there is powerful evidence that relatively small adjustments to revenue and spending can take care of any future Social Security shortfall.

The deficit hawks, however, think they had better scare us into accepting benefit cuts now, because it will be harder later on. Their claims are misleading. For example, more older Americans means more public money spent on pensions and medical care, but it also means less spent on public schools.

It is ironic - and infuriating - that we are having a debate about Social Security when the program has nothing to do with the nation's journey from surpluses to deficits over the past decade. Two wars, the Bush tax cuts, and the economic crash of 2008 explain the deficit problem. So why are we even discussing reducing Social Security? Not because there is a good rationale, but because of the rationalizers of smaller government.