Today's Opinions, Tomorrow's Reality 

Moral Bankruptcy
The Politics of Insolvency and Denial

By David G. Young

Washington, DC, January 18, 2005 --  

Given the trillions of dollars that older Americans stand to gain if the status quo is retained on Social Security, it should come as no surprise that powerful forces are aligning to fight President Bush's Social Security reform plans. What is surprising, however, is how many politicians have refused to come up with so much as a fig leaf of a reform alternative for the insolvent program. Instead, Democrats and their lefty allies have gone into pure denial. And denial makes people say some pretty outrageous things.

"Social Security is not, in fact, bankrupt, nor will it ever be," says Rep. Peter A. DeFazio (D-Oregon.)1

He and Bernard Wasow, an economist with the anti-Social Security reform Century Foundation, point to the system's dedicated source of tax revenues -- deducted each pay period from every employee in America. Based on these projected revenues, Social Security will be able to pay out 73 percent of promised benefits in 2042.2

"That's not bankrupt" Wasow says.3

This line of argument has spread outside lefty circles. Even Chris Wallace, moderator of the right-leaning Fox News Sunday interview program, used this line of reasoning: "[I]f you did absolutely nothing to the system, it wouldn't be broke. It wouldn't be bankrupt. In fact, there would be a problem, but you would be able to still pay about three-quarters of everybody's guaranteed benefits."4

Can you imagine if bankrupt United Airlines went to the judge assigned to their Chapter 11 bankruptcy court and tried that line of reasoning? "Your Honor, United Airlines has enough revenue to pay our creditors 73 percent of what we promised to pay them, so we're really not bankrupt, after all."

Is paying 73 percent of your bills good enough? Anybody who thinks this is reasonable should try the same thing when making their credit card payment -- it simply doesn't fly. This all goes to show that some Washingtonians really need to spend some time outside the Beltway.

While the "it's not bankrupt" argument is patently false on specifics, there is a bit more to it. The argument's bigger idea is that Social Security isn't in as bad of shape as the Republicans are saying. If benefits were scaled back by about a 25 percent, Social Security would be viable on paper for the foreseeable future. While this is true on paper, this theory relies on money from the "Social Security Trust Fund" -- a fund that no longer exists because Congress spent it all in the 1980s and 1990s. The fund contains nothing but worthless government IOUs -- IOUs that the Treasury can's dream of paying back without Congress passing draconian tax increases or spending cuts.

Even if this were to happen, the "it's not bankrupt" crowd would need to pull off a 25 percent cut in Social Security benefits. Scaling back entitlements is always a terribly difficult to do. Entrenched special interests -- the people who expect to receive the entitlements -- will spend billions of dollars lobbying politicians to maintain payouts. For evidence of this, one need look no further than today's AARP campaign to fight off the Bush Administration's Social Security reform plans.

The AARP will fight to the death any effort to scale-back Social Security into solvency. And the very politicians who are making the incorrect argument that Social Security is not bankrupt show absolutely no interest in scaling benefits back in the way necessary to keep it from becoming so. Some of the same head-in-the-sand politicians voted to expand the costs of bankrupt Medicare program. And many of those who opposed 2003's Medicare expansion, like DeFazio, did so only because they wanted to give bigger handouts to seniors.5

This short-sighted attitude may earn support for politicians with elderly constituents, but it risks exposing them to the future wrath of younger Americans, who are being forced to pay taxes into a Social Security system that cannot hope to pay out promised benefits.

"When does the program go belly up?" asks Rep. Rob Simmons (R-Connecticut), "2042. I will be dead by then."6

This is perhaps the most distressingly insightful statement regarding how politicians approach Social Security, Medicare, and other entitlement programs. The sad truth is that we are entrusting our country's future to those who won't live to experience the disastrous consequences of their actions. Denying serious problems may be politically expedient. But there is no denying that politicians who pass on problems to future generations are as morally bankrupt as Social Security will be in the near future.

Related Web Columns:

Bug Eyed and Beautiful, May 25, 2004

Mugged By Grandma, July 8, 2003

Avenging an Evil Plan
The Hastened Death of Social Security
, January 26, 1999

Prune Juice in Florida
Your Tax Dollars at Work
, January 28, 1998

Seeing the Whites of Their Lies
The Social Security Budget Beachhead
, October 7, 1997


1. The Washington Times, Social Security Reform Mocked, January 16, 2005

2. The Washington Post, Bush Promotes Plan For Social Security, January 12, 2005

3. Ibid.

4. Fox News, Transcript: Presidential Adviser Dan Bartlett on FNS, Sunday, January 16, 2005

5. Defazio, Peter, House Approves Medicare Prescription Drug Package, June 27, 2003.

6. The Washington Post In GOP, Resistance On Social Security, January 11, 2004