Looming Debt Limit Stand Off Could Threaten Your Social Security
Richard Chamberlin is an 87 - year - old with a mission. A retired Methodist minister living in Lancaster, Kentucky, Chamberlin is concerned about the state of Social Security and spear headed an effort to make sure Congress “repays” the money the government has borrowed over the years from the Social Security Trust Fund — about $2.8 trillion.
Like Chamberlin, virtually all Social Security recipients take a dim view of the fact that the Social Security Trust Fund doesn’t operate by the same set of rules that apply to trusts set up by banks for ordinary people. The Social Security Trustees issue a report on the financial state of the program every year, but the report is merely an accounting on paper. Other than the monthly payment people receive, there are no real cash assets sitting in accounts with the taxpayers’ names on them.
Social Security retirement, survivor, and disability benefits are funded primarily through taxes paid by workers and their employers, and the taxation of Social Security benefits received by the disabled and older Americans. For decades the amount of revenues paid in was greater than the amount of benefits paid out. During this period the government issued special non-marketable bonds, or I.O.U.s from the U.S. Treasury, to the Social Security trust funds, and used the excess revenues for other spending. The Social Security trustees refer to these bond I.O.U.s as “assets or reserves.”
The Trustees recently estimated that the trust funds hold about $2.8 trillion of special “assets.” Those special assets represent a promise to repay the trust fund, backed by the U.S. government. But today, when the federal budget is in deficit, that promise to pay Social Security recipients depends on three things— the willingness of Congress to:
- borrow to repay the interest and principal on those I.O.U.s.,
- to agree on fair and equitable tax changes, and
- to stop wasteful spending and go after fraud and abuse.
Borrowing and raising the debt limit was severely put to the test in recent years when the federal budget bumped against the federal debt limit — something expected to happen again in November or December of this year. If Congress fails to come to an agreement to lift the federal debt limit, Social Security payments to all beneficiaries could be delayed, or benefits may not be paid in full.
Some members of Congress want big reductions in the federal budget deficit to slow or reduce the growth in the national debt. In debt limit negotiations in 2011 and 2013, Social Security Cost-of-Living Adjustment (CLAs) cuts were targeted as a key means to lower the growth in the deficit. But outrage from older voters, including TSCL’s members and supporters, sent lawmakers looking for alternatives. TSCL continues to be concerned that debt negotiators may try COLA cuts again.
Richard Chamberlin was successful in gaining unanimous support for his petition — something totally unheard of these days on Capitol Hill or the presidential campaign trail. Chamberlin’s petition was voted on and passed unanimously by both the Lancaster, Kentucky city council, and the Garrard County Fiscal Court, where he lives. TSCL is sharing Mr. Chamberlin’s story with Members of Congress in an effort to get a similar resolution introduced.
Efforts like these by Mr. Chamberlin can be highly effective in conveying what the voters want during tense debt limit stand - offs. “Petitions, letters to the editor, letters to Members of Congress, email, faxes, phone calls and attending town hall meetings all are a way we can get the message out and make our voices heard loud and clear,” says TSCL Chairman Ed Cates. “ “Let’s tell Congress ‘No broken promises! Money to pay benefits must be budgeted for, and that Social Security must be paid in full and on time!”
Sign a petition: No Budget Deal That Sells Out America’s Seniors!
Contact your member of Congress here.
