In order to solve the budget impasse, Dick Durbin says that everything has to be on the table. In almost literally the next breath, Durbin then says Social Security reform will kill any budget deal, because even though budget talks can’t be serious without entitlement reform, Congress will refuse to address one of the Big Three entitlement programs. If you think that’s incoherent, wait until you find out why:
It’s very hard, very difficult, when you get into the entitlements, but you can’t have a serious conversation about the future of our economy and our deficit without putting everything on the table. Social Security is a little different. It does not add a penny to the deficit.
Er … what? Right now, the Social Security Administration runs monthly deficits to pay benefits. That forces the SSA to cash in its Treasuries — it has no other cash reserves — to cover the shortfall. Since the US is running $1.6 trillion deficits at the moment, Treasury has to borrow money to pay off those notes, which means it does indeed add lots of pennies to the deficit, in real terms, as well as to the national debt.
Let’s also talk about our debt position. We owe over $14 trillion, of which more than $4 trillion is owed to SSA and other agencies of the government, thanks to decades of Congress raiding Social Security surpluses to hide earlier deficit spending. The debt service on those notes counts as mandatory spending, which increases the deficit as well. A significant portion of that debt service covers the bonds in the so-called SSA trust fund. That also contributes lots of pennies to deficit spending.
Durbin complains that Republicans are listening more to Grover Norquist than Harry Reid:
When pressed on how both parties could come to an agreement, Durbin dug at GOP tax guru Grover Norquist and defended the interests of his party’s leadership.
“They don’t talk about Harry Reid, they talk about Grover Norquist, who won’t even let them say the word ‘revenue.’”
Reid’s pulling a Rip Van Winkle, declaring twenty years of sleep on Social Security reform; why would anyone listen to him snore? As for opposing “revenue,” the US government already gets 20% of the nation’s GDP. The problem isn’t a lack of revenue; it’s the fact that they want to spend 25% of the nation’s GDP. We don’t need more “kinetic revenue actions,” we need spending cuts and entitlement restructuring across the entire breadth of federal mandatory spending.
Update: Keith Hennessey has a must-read post on deficits as “an important but incomplete metric”:
Almost all elected officials of both parties will tell you (and believe) that deficits are bad, that they don’t want to shift financing costs to future taxpayers. Yet they have a political incentive to do so, since they gain the political benefits of promising all sorts of government stuff today, and they have an incentive to avoid the political costs of imposing higher taxes on today’s voting taxpayers.
And while the public debate centers around budget deficits, the first allocation question is harder to resolve. The deep philosophical and partisan split in the American fiscal policy debate is mostly about the relative sizes of the government and the private sector, not about the allocation of the cost of that government between the present and the future.
Be sure to read it all.