Host intro: Is the Social Security system really in trouble? Many think a small adjustment in the payroll tax will fix the system's trouble for the next 75 years. But commentator Pete du Pont of the National Center for Policy Analysis says beware of the 2.2 percent solution.
Why 2.2 percent? It's the amount reformers — henceforth known as tweakers — would cut benefits or raise taxes to stabilize Social Security.
But the tweakers ignore one thing: the number, technically known as the system's actuarial balance, is an accounting fiction.
That's because it doesn't represent real, previously collected, surplus money that can cover future deficits. The system's "assets" — that's in quotation marks — are just treasury IOUs.
What really matters is Social Security's operating balance, the annual difference between outlays and projected revenues. That turns negative in 2012, and insolvent in 2029. Even with the tweakers' 2.2 percent tax increase or benefits cut, red ink gushes in 2021.
Worse than that, we've built castles in the air on castles in the air: as a recent article from the concord coalition notes, the phony surplus in Social Security has prompted congress to tax less and spend more than it otherwise would, borrowing more from Social Security's "surplus."
Ultimately, the tweakers' actuarial balance is just another way of saying Social Security — with its mythical money and mythical growth — doesn't need drastic reform. We can content ourselves with comforting — mythical — numbers. And our children can clean up the mess.
Those are my ideas. And at the NCPA, we know ideas can change the world. I'm Pete du Pont, and I'll see you tomorrow.
Host outro: on Monday, Pete du Pont has a review of the new book by Charles Murray, co-author of "The Bell Curve."