“We believe, and I think most would agree, that Social Security is not responsible for the deficit and clearly shouldn’t be on the table for discussion,” Larson said on Wednesday.
But according to an April 2012 report from the Social Security and Medicare Board of Trustees, Social Security in 2010-2012 ran deficits for the first time since 1983, meaning that payroll taxes fell short of benefit payouts.
“Social Security’s expenditures exceeded non-interest income in 2010 and 2011, the first such occurrences since 1983, and the Trustees estimate that these expenditures will remain greater than non-interest income throughout the 75-year projection period,” the report said. “Redemption of trust fund assets from the General Fund of the Treasury will provide the resources needed to offset the annual cash-flow deficits.”
In other words, Social Security must dip in to the Treasury’s General Fund – which is already running a deficit – to make up the difference between the benefits promised to retirees and the taxes it collects from current workers.
In its Oct. 5 monthly budget review, the Congressional Budget Office estimated the budget deficit was approximately $1.1 trillion in FY 2012, or 7 percent of Gross Domestic Product (GDP.)
The “Social Security Benefits” category of the federal budget accounted for approx. $762 billion in outlays, which was $42 billion (or 6 percent) higher than in FY 2011.
At a Capitol Hill press conference on Wednesday, a reporter asked Larson, “Congressman, if the Republicans are willing to step up and raise revenue (taxes), will House Democrats provide votes to cut benefits to programs like Medicare and Medicaid?
Larson responded, “Clearly as [National Economic Council Director] Gene Sperling was saying today, the president’s willing to look at what they’re [House GOP] going to put forward in terms of revenues but that hasn’t been forthcoming, shall we say. But where the president has been very clear is in terms of the impact on beneficiaries -- and beneficiaries are the people who are the recipients of Medicaid, Medicare and Social Security.”
“We believe and I think most would agree that Social Security is not responsible for the deficit and clearly shouldn’t be on the table for discussion,” he said.
On his congressional website, Rep. Paul Ryan (R-Wisc.) warns the U.S. government will have to raise taxes and borrow more money to keep Social Security afloat.
“The Social Security Trustees project that the cash flow deficits that began in 2010 will continue permanently,” says Ryan. “That means that to pay full Social Security benefits, the government must cut spending, raise taxes, or borrow more money to finance pension payments.”