WASHINGTON -- The Concord Coalition today urged Congress and the president to run budget surpluses at least as large as Social Security's annual surplus, which has been borrowed each year since 1983 to mask the size of annual budget deficits.
While the latest projections from the Congressional Budget Office (CBO) predict a budget "surplus" of $14 billion by 2001 under current policies, that surplus is only possible by borrowing Social Security's surplus of $130 billion in that year. Without borrowing the Social Security surplus, CBO projects the deficit would be $116 billion in 2001, and balance would never be reached before the Baby Boomers begin retiring in mass in 2008.
"Policy makers who are lining up to spend those so-called budget surpluses should keep in mind that the money they are talking about consists entirely of Social Security's annual trust fund surpluses," said Martha Phillips, executive director of the Concord Coalition. "We should be saving those surpluses to prepare for the retirement of the Baby Boomers, which will put a huge financial strain on future taxpayers."
A Presidential Commission headed by Alan Greenspan recommended in 1982 that payroll taxes be increased in order to partially pre-fund the retirement of the Baby Boomers, the largest generation in American history. But rather than saving the surpluses to prepare for the massive demographic shift, Congress has borrowed them ever since for other government programs.
Since 1983, $647 billion has been borrowed from Social Security's trust fund to lower the size of annual U.S. budget deficits. Money borrowed from the trust fund will have to be paid back through tax increases or benefit cuts once the Boomers start collecting their Social Security retirement checks.
Phillips said the best way to meet future needs is to follow through on the Greenspan Commission's 1983 recommendation and exclude the Social Security surplus from any calculation of future budget surpluses.
She also pointed out that while the Social Security system is running annual surpluses today, it will begin running growing annual deficits around 2012.