Let’s Pay Twice for the Same Benefits

By James Schaefer.

Government has been using the Social Security Trust Fund to help finance government services and programs since around 1970 (see SSA History, the section entitled “On-budget”).  In doing so, it has taken money intended for the future and spent it today.

Beginning in 2010 for the first time, Social Security will begin to pay out more than it takes in; the program will briefly return to solvency in 2012, and then go into permanent negative cash flow starting in 2014 or 2015.

Negative cash flow means that you’ll have to pay extra taxes in future years to provide Social Security benefits that were supposed to be covered by the Trust Fund.  American taxpayers will have to pay twice to provide the same Social Security benefits.

In the near term Congress might try to borrow to cover the shortfall.  The result would be more debt and bigger interest payments;  and a real sense of worry among America’s foreign creditors.  Nervous creditors mean higher interest rates, which would cause the debt to rise faster and faster.  This is what triggered the recent crisis in Greece.

Anyone see the risk of a “snowball effect” of yet more taxes on America’s families and businesses?

Pay me now or pay me later; there is no free lunch.

It applies equally to government programs — in Washington, and in our state legislatures — as it does to consumer credit card purchases and business spending.  Ultimately, we have to pay the piper.

As consumers, we must distinguish between what we need and what we want; and, if we are fiscally prudent, we avoid using borrowed money to buy things we simply want.

We should expect the same fiscal discipline from our public servants in Congress.

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