PBS Mirrored GOP Lies on Social Security and the Debt
Then coanchor Geoff Bennett and correspondent Lisa Desjardins, standing before a screen with varying charts, discussed the growing interest paid on the federal debt. As Desjardins put it, “just the interest on our debt is so large [in the past year] that it is almost [the size of} the entire Department of Defense budget.” That statement may be true, but that was not the punchline of the segment.
Social Security hasn’t reduced available general revenue nor been the reason why politicians are not funding programs for younger constituencies.
The NewsHour segment ended mirroring the Republican Party’s mantra that Social Security is the major driver of the federal debt. As Desjardins concluded “the three largest drivers of the debt are in reality” Social Security, Medicare, and interest on the debt, with each in the chart displayed indicated as accounting respectively for 21.2%, 12.9%, and 10.5% of total federal expenditures. Desjardins added, “Really what’s happening here is Congress is not addressing the big drivers of the debt at all.”
In a recent piece with misinformation embedded in its title alone, “Why We’re Borrowing to Fund the Elderly While Neglecting Everyone Else,” columnist Catherine Rampell also implied that borrowing to fund Social Security benefits will, as she wrote, “continue to crowd out future spending obligations in years ahead” on programs for the young like “pre-K, or child care, or paid parental leave, or a more generous child tax credit.”
One problem in such depictions exemplified by the NewsHour and in Rampell’s article is that Social Security, specifically, is funded almost exclusively by its own revenue source. Not by borrowing, as Ms. Rampell implies without providing supportive evidence for that contention (because there isn’t any). Nor funded by general revenue as likely many believe when seeing typical charts on federal spending (like that shown in the segment aired on PBS NewsHour) that include Social Security expenditures, which are not at all funded by general revenue but, rather, by its separate targeted payroll and income taxes.
Actually, as I have written about previously, Social Security is today the entity owning the most debt, $2.7 trillion in Treasury securities (Monthly Treasury Report, Table 6, Schedule D as of October 31, 2023). More than the two foreign governments owning the most U.S. debt, Japan today owning U.S. securities valuing $1.1 trillion and China with under $1 trillion.
Surpluses in Social Security revenue by law have to be invested in U.S. securities. And revenue surpluses have over the years been the norm in the program. Thus, Social Security for years, in essence, funded the debt with its surplus revenue, not caused it.
Social Security hasn’t reduced available general revenue nor been the reason why politicians are not funding programs for younger constituencies as Ms. Rampell alludes to in her piece. Tax cuts during the Trump and Bush administrations, however, did help do that. Growth in deficits and debt, as analysis by the Center for American Progress indicates, has largely been driven by those tax cuts. Tax cuts reducing general revenue applicable to programs like the earlier expanded child tax credit that, before expiring, lifted more children out of poverty.
The Social Security program has nevertheless, according to reports by the Board of Trustees overseeing the program, recently incurred shortfalls in its dedicated revenue stream. In 2022, a 4% shortfall noted in the trustees’ current report (Table II.B1, page 7). And those recent shortfalls have been met simply by just cashing in some U.S. securities the program acquired over the years with revenue surpluses.
But true enough, within current parameters of the program, the trustees predict the program’s reserves (i.e., securities) will be depleted by 2033. Then relying solely on Social Security’s separate tax revenue, it is predicted only 77% of benefits due will be payable. That’s not being totally broke, but it would have an adverse effect on the income many elderly depend upon.
Raising the Social Security retirement age to purportedly reduce costs also has adverse effects that, as I discussed earlier, the Congressional Research Service among others have outlined. For one, among those of lesser means who also on average have lower life expectancies, increasing the retirement age would reduce their lifetime Social Security benefits collected disproportionately relative to reductions among higher income earners with typically longer life expectancies. Increasing the retirement age would, furthermore, disproportionately harm those retiring early due to work-related health impairment suffered most prevalently in blue-collar occupations.
A different option some propose to increase revenue is eliminating the cap on the income subject to the Social Security payroll tax. In 2024 the limit on income taxed will be $168,600. Income above that limit would not currently be taxed.
However Social Security is made solvent for the future, one thing is quite clear. Social Security has not been the reason for incurred and increasing U.S. debt.
