Janice Gregory, President, National Academy of Social Insurance
First, Social Security did not “go cash negative” in 2010. Such claims ignore the $118 billion that Social Security received in interest payments from the program’s $2.6 trillion reserves, which are invested in US bonds. This interest is real cash and is legitimate income to the program, just as would be true of income on bonds held by you or me, China, a large bank, or any other entity. With that income, the program had a $69 billion surplus in 2010 – money that was in turn invested in additional US bonds. We do not blame problems related to interest payments on our national debt on these other entities who continue to invest in us. Social Security is no different.
Second, Montgomery’s discussion of the payroll tax holiday incorrectly “blames” Social Security for the budget impact of an economic stimulus program that has nothing to do with Social Security policy nor with the short- or long-term viability of the Social Security program. Under the Tax Relief and Job Creation Act of 2010, the Social Security funds are made whole for this temporary reduction in payroll taxes. Voters rightly would be outraged if Social Security benefits were cut because of this unrelated policy decision.
In short, the article turns the budget problem on its head. Our budget woes are due to non-Social Security spending and revenue decisions, not to the Social Security program.
Janice Gregory, Washington
The writer is President of the National Academy of Social Insurance, a nonprofit, nonpartisan organization made up of the nation’s leading experts on social insurance.