February 05, 2013
The Honorable Kristi Noem
1323 Longworth House Office Building
Washington DC, 20515
Dear Rep. Noem,
In answer to a recent question on Social Security and the national debt, you stated:
“Social Security is running at a deficit today…We’re having to make up that deficit out of the national treasury. That’s why we have to shore it up.”
By law, however, Social Security can only spend money from its designated payroll tax or interest on the bonds in its trust fund. Therefore, it cannot contribute to budget deficits or the national debt. Currently it is spending interest from the government bonds it owns, in addition to its designated payroll tax receipts. It makes no more sense to say that this spending from interest contributes to the deficit than if you or I were to spend interest on government bonds that we owned.
Since by law, Social Security is financed by its own revenue stream, it seems peculiar that you would bring it up in the context of the national debt and deficits. Your constituents might be interested in knowing why you discuss Social Security in this fashion.
While Social Security is projected to face longer term-shortfalls, I assume you are aware that both the non-partisan Congressional Budget Office (CBO) and the Social Security Trustees Report show that Social Security will be able to pay full benefits into the 2030s and over 75 percent of benefits thereafter if no changes at all are made to the program.
If you are interested in ways to tackle the long-term solvency of Social Security I would be happy to discuss this with you. I hope you are more careful in the future when discussing Social Security, deficits and the national debt.
Sincerely,
Dean Baker, Co-Director, Center for Economic and Policy Research
