CATO Institute Weighs in Federal Debt and Social Security
In a recent white paper, Cato Institute’s Romina Boccia and Ivane Nachkebia portray Social Security as a “key contributor to the United States’ fiscal imbalance,” outlining the history of revenue flows through the intragovernmental accounting mechanism known as the program’s trust funds. It’s an interesting theoretical debate that, unfortunately, casts Social Security in a negative light among parties removed from the nuances of federal government financing, but it goes some distance in explaining the relationship between federal borrowing and Social Security’s financial history.
Perhaps the most interesting perspective appears in the early part of the document, where the authors note “Social Security surpluses likely enabled Congress to increase spending or decrease taxes elsewhere in the federal budget” and that “trust fund reserves reflect past surpluses that provided no lasting fiscal improvement and, in fact, may have worsened the long-term US fiscal outlook by facilitating the expansion of federal entitlement programs and tax reductions, adding permanent and growing federal liabilities.” A worthwhile read that you can check out here…