U.S. taps Social Security reserves
By Jonathan Weisman, USA TODAY
Discussion
How should the U.S. make Social Security fiscally sound?
WASHINGTON — Despite their ardent pledges to place surplus Social Security funds in a "lock box," President Bush and Congress are already picking the lock, congressional sources from both parties say.
The Congressional Budget Office (CBO) is expected to release a revised budget-surplus estimate on Aug. 28 that indicates Social Security reserves will be tapped for other government spending during the current fiscal year, which ends Sept. 30.
The White House budget office soon will produce its own estimate that shows the Social Security surplus untouched — but only because of a change in long-standing accounting methods that the administration says make surplus data more accurate. "The president's budget fully protects Social Security," Bush's spokesman, Ari Fleischer, said Wednesday.
This fiscal year, Social Security is expected to collect $156 billion more in taxes than it pays in benefits. Politicians in both parties have pledged to use that money only to pay retirees or reduce the national debt. That promise seemed easy to keep in January, when CBO estimated the budget would have $125 billion in surpluses this year on top of Social Security reserves.
But that cushion is gone. About $74 billion went to the tax cut. Up to $40 billion in expected revenue was lost to an economic slowdown, says William Hoagland, Republican staff director of the Senate Budget Committee. The rest went to increased spending.
Hoagland said he expects the CBO to project that the government will tap at least $3 billion of the Social Security surplus this year, keep out of it in fiscal year 2002 and spend up to $15 billion of Social Security reserves in 2003 and again in 2004. That would have no effect on current Social Security benefits, but budget analysts say it would be a significant step backward from recent pledges of fiscal discipline.
The White House says the Social Security surplus will remain off limits for the next 10 years. But to keep its pledge to protect the funds, White House economists had to alter accounting practices.
Every summer, government accountants recalculate Social Security tax receipts and adjust the current budget accordingly. This time, the recalculation would reduce the 2001 surplus by $4.3 billion — and show that the government used the money. So this year's Social Security reserve won't reflect the recalculation. An administration official said the change gives a better picture of Social Security's current status.
Wednesday, Democratic leaders cited the threat to Social Security's surplus and urged Bush to address "this fundamental change in our fiscal situation." |
