Voting in favor of the Cut, Cap and Balance Act and the BBA is to vote for draconian cuts to Social Security. These measures will result in a huge and outrageous raid on the Social Security Trust Fund, which is paid for by those who contribute to it. Social Security should not be treated as a piggybank used to reduce the deficit or to fund continued tax breaks or new spending.
Social Security has no borrowing authority, and so it cannot deficit-spend. Because it is self-financed and its revenue exceeds benefits paid, Social Security does not contribute a penny to the federal deficit. It has a surplus of $2.7 trillion in 2011 that will grow to $3.7 trillion by 2022. Social Security can pay all benefits in full through 2035 and more than three-quarters of benefits for the next 75 years.
That’s because Social Security would be prohibited from drawing down its large surplus due to the BBA’s requirement that federal spending in any year must be offset by revenues collected in that same year. Only a three-fifths vote in both chambers of Congress would permit deficit spending – a very high bar to overcome.
The BBA would require reducing federal spending as a share of the economy to 18 percent by 2021 - down from the current 24 percent. This would require draconian cuts to Social Security at a time when the baby-boom generation is about to retire.
The Economic Policy Institute has examined the effect on Social Security of a BBA requirement beginning in 2016. Assuming that the spending cuts required would be distributed evenly across the government, Social Security would be cut by $1.8 trillion from 2016 to 2020 – about a one-third cut.
Needless to say, cuts of this magnitude would have a devastating effect on beneficiaries, plunging millions into poverty and making for a very bleak future for most others. Already more than one-third of beneficiaries depend on Social Security for more than 90 percent of their income and nearly two-thirds depend on it for more than half of their income.
Congress has a fiduciary responsibility to make sure that Social Security contributions from American workers and their employers are kept segregated, in reserve, safely and conservatively invested in Treasury notes backed by the full faith and credit of the United States, to be available when needed to pay scheduled benefits. This is what allows for the promise of Social Security to be realized. To enact reckless legislation that would break that promise by in effect allowing for those contributions to be raided for other purposes is morally wrong and politically very risky. We urge you in the strongest possible terms not to do it.
Nancy Altman- Campaign Manager
Eric Kingson- Campaign Co-Chair
Frank Clemente- Campaign Co-Chair
The Strengthen Social Security Campaign is comprised of 320 organizations and represents more than 50 million members.