Bruce Ramsey, a columnist for the Seattle Times, apparently thinks it is really cute to call the U.S. government bonds held by Social Security "IOUs." That is the only possible explanation for using this unusual term for government bonds in a column that is completely incoherent.
Ramsey apparently thinks that he is giving his readers news by telling them that they don't have a constitutional right to Social Security. This is of course true, but people do not have a constitutional right to many things that they can reasonably depend on, such as drinkable water, roads they can walk and drive on, not having their income taxed at a 90 percent average rate.
Congress could change laws tomorrow and make it so that we no longer enjoy any of these items, the constitution will not prevent them. But most of us conduct our lives as though Congress will not take such steps, because any Congress that did take away any of these items would likely be voted out of office quickly. Similarly, any Congress that substantially reduced Social Security benefits would likely be looking for new jobs quickly also. So, there is no constitutional right to Social Security benefits; there is just the fact that in a democracy it will be very difficult for Congress to substantially reduce Social Security benefits, since almost everyone either depends on them or expects to depend on them in the future.
But the serious inconsistency problem arises when Ramsey talks about the government bonds held by the Social Security trust fund:
"If you or I had the bonds, we would be trillionaires. But Social Security is the government — and an organization's IOUs are not an asset to itself."
Okay, first off, under the law, Social Security is a distinct entity from the government. Mr. Ramsey may not like this fact, but that is the law. This means that the bonds held by Social Security are an asset to Social Security.
Congress can change the law, but as the law is written now, both the bonds and interest on the bonds are assets to Social Security. This means that under current law as long as the trust fund holds bonds, Social Security must pay full benefits. (If Mr. Ramsey knows any member of Congress who plans to vote to default on the bonds held by the trust fund he could do a great service to his readers by publishing their names. Their constituents would probably want to keep this information in mind at election time.)
The inconsistency in Ramsey's argument is that if we take his "Social Security is the government" line at face value then his article makes no sense.
Let's say Social Security is the government just like the Defense Department, the Education Department or the State Department. What does it mean to say that Social Security has a deficit? Does the Defense Department have a deficit?
If Social Security is just like any other part of the government then it makes no sense at all to discuss the program as running as a surplus as deficit. The government collects revenue though a variety of sources, including a payroll tax, and it has various expenses. If we take Ramsey's view of Social Security (ignoring current law) then claiming that Social Security has a deficit or faces a shortfall is nonsense.
Of course that is not the direction that Ramsey goes. He wants to cut benefits because current Social Security tax revenues are less than current benefits. However after he just told us that there is no link between these two -- Social Security is the government -- there is no reason anyone should care whether the payroll taxes designated for Social Security are bigger or smaller than the benefits paid out.
Essentially what Ramsey wants is to say that Social Security is the government when taxes exceed benefits, so the money cannot be banked for future benefits -- but Social Security is not the government when benefits exceed taxes -- so then he can say that benefits have to be cut.
It's dishonest, but hey, it's not like Social Security can sue him for libel.