The Fortune magazine columnist Allan Sloan, no rabid right-winger, thinks the recent fiscal cliff fiasco should serve as a warning for Democrats who see no need to reform Social Security. He explains why in the latest issue.
I now fear that Democrats, currently feeling as empowered as the Bushies felt a dozen years ago, will make the same mistake with Social Security that the Bushies made with taxes.
Just as Bushies used ridiculous numbers to justify tax cuts, the official Democratic position uses ridiculous math to claim that Social Security doesn’t need fixing. The logic, such as it is: Social Security isn’t a problem because it shows a federal budget surplus. (I don’t know if there’s a different, unofficial position. I sure hope so.)
But our country’s real fiscal problem isn’t the federal budget deficit. It’s the huge increase in debt our country is incurring to pay our bills. In the fiscal year ended Sept. 30, the Treasury had to borrow $160 billion (including $112 billion for the payroll tax holiday) to cover Social Security’s bills, even though the program showed a $65 billion budget surplus. (I explain the math below.)
Right now, Democrats are riding high. But if they don’t work out relatively modest, bipartisan cuts of future Social Security benefits now, in a decade or two the political climate may have changed, Social Security’s problems will be worse, and cuts will be bigger and nastier than if they’re made now.
