Social Security Benefits Do Not Contribute to the Federal Deficit
Representative Reid Ribble and others are calling for
reductions in Social Security benefits as a part of the effort to reduce the
federal deficit. This is wrong in several ways. First, Social Security payments do not
contribute to the federal deficit. Social Security is fully funded by the
social security tax, which is collected from workers and employers. So, cutting
Social Security benefits would not do anything to reduce the deficit. In fact,
it might very well increase the deficit because people whose benefits were cut
would become poorer, and some of them would apply for food stamps or other
programs that are paid for out of the federal government’s general revenue,
thereby contributing to an increase in the federal deficit.
Cutting Benefits Would Place an Unfair Burden on the Old
Second, cutting benefits would place the burden of making
Social Security itself solvent for the long term entirely on the old. Although
Social Security does not contribute to the federal deficit, the program has its
own long-term financial problems that have to be fixed. Social Security will
become unsustainable during the next 20 years if we do not find a way to
improve its finances, but there are several ways to do that without cutting benefits.
We can raise the level of wages that are subject to social security tax, we can
tax non-wage income like interest income, dividend income or capital gains, or
we can raise the social security tax rate slightly (2%). Some combination of
these can make Social Security solvent for the foreseeable future while
spreading the burden equitably among all of us. In contrast, cutting Social
Security payments would place the burden of making Social Security solvent for
the long run entirely on a group many of whose members are already poor. Many
old people are already struggling to make ends meet. Such people include elderly
veterans, and we should certainly not reward their selfless sacrifices by
making their last years harder than they already are.
Cutting Benefits Would Hurt the Economies of Wisconsin and the Fox Valley
Third, cutting Social Security benefits would harm the
economies of Wisconsin and of the 8th Congressional District where
we live.
In Wisconsin, more than 1.1 million people collect Social Security benefits,
and their benefits contribute almost $16 billion to the state’s economy. In the
8th Congressional District alone, 141, 855 people receive total
benefits of $2.02 billion. Almost all of these dollars are spent locally.
They create jobs and contribute to the profits of local businesses. Cuts to Social Security benefits would thus
directly harm the economy of our area by reducing the amount that Social
Security recipients spend. Be careful what you wish for. You might get it.
