Obama's Fatal Mistake on Social Security

by: Paul Roderick Gregory 

In a speech in Rockville, Maryland today, President Barack Obama blew up the Democrat’s social-security “third rail” in eighteen words.  Usually, Obama’s gaffes come off-the-cuff. Today’s remarks were, however, prepared; namely:

“In a government shutdown, Social Security checks still go out on time. In an economic shutdown — if we don’t raise the debt ceiling — they don’t go out on time.“ 

Obama’s clear threat: If the Republicans do not raise the debt ceiling by October 19, retired Americans risk not getting their social security checks!

Obama’s threat will prove a fatal mistake that he cannot “walk back,” as the Washington pundits like to say.

In these eighteen words, Obama destroyed the Democratic Party’s claim to be the protector of retired Americans, who have earned their social security checks through decades of payroll-tax contributions. The Democrats warn that Republicans want to privatize social security and enrich Wall Street with risky investment schemes. Under us, however, your retirement funds are in a “lock box,” which guarantees you every retirement dollar you have earned. Only the Democrats stand for retired Americans. 

But Obama today said something entirely different! He admitted there is no lock box. Whether retirees get their social security checks now somehow depends upon the federal government being able to borrow more.  And I thought social security funds were in the “lock box” of the “Old Age and Survivors Trust Fund,” which at last count has a balance of $2.4 trillion in safe U.S. government securities.

Obama’s threat is made even more puzzling by the fact that contributions to social security pretty much pay for retirement benefits. Obama’s proposed budget estimates that American workers will contribute $739 billion into the lock box, which covers 86 percent of the $860 billion owed this year to retired Americans. The $121 billion shortfall can be paid out of the multi-trillion dollar trust fund. There is plenty of money for retirement benefits. Retirees will ask: Why are you all of a sudden tying our checks to the government’s borrowing limit? There is more than enough money for us retirees, and we have been told it is our money. We do not understand! 

When Obama tries to walk this one back, he’ll probably say: “We plan to spend $4 trillion in 2014, but we only have revenues of $3 trillion.  If we cannot borrow the one out of four dollars we need, we’ll  have to live on $3 trillion (what we spent in 2008, by the way). Without more borrowing, you retirees have to get in line with everyone else. Too bad, if you don’t get your retirement checks, but federal employees, contractors and Homeland Security are in line too.

I doubt that will go down well with older Americans and even with one of the President’s staunchest allies, the AARP. I receive a monthly retirement check after contributing into the lock box for fifty years. Waiting in line for my check will not sit well with me, for sure.

To protect retired Americans, the Republicans in Congress should offer a bill to prevent President Obama from defunding social security as he proposed today in Rockville, Maryland. I’d like to see how many negative votes it would get. Ted Cruz, Rand Paul, and Mike Lee  get your pens ready. Harry Reid: Are you going to refuse a vote to protect grandpa’s social security?

PS Treasury Secretary Jack Lew should be fired for saying that, in case the Republicans do not raise the debt ceiling, he might have to default on America’s debt. If he can’t find $200 billion from the $3 trillion in anticipated revenues, we need a new treasury secretary.