The Social Security trust fund should be removed from calculations of the federal deficit because it makes the budget picture too optimistic and undermines the retirement program, a House panel says.
"The Social Security trust funds represent an opportunity for current workers to save for their retirement," the report said. "But, they cannot have this effect if they are used simply to offset current deficits in other federal accounts."The task force, appointed by House Democrats Byron Dorgan of North Dakota and Mary Rose Oakar of Ohio, included a bipartisan group of economists. The panel's view echoes a growing perception on Capitol Hill that using Social Security taxes to hide shortfalls in the government's operating budget is flawed and allows a drain on the economy.
The 1983 revisions to the Social Security law increased retirement taxes on workers to build up a surplus that would protect the Baby Boom generation when it retires early in the next century. According to recent calculations by the Congressional Budget Office, the Social Security trust fund surplus reduces the deficit by $56 billion this year and will soon top $100 billion a year.
But because that money is covering the shortfall in the rest of the budget, the government-enforced savings is essentially canceled.