Policy adjustments to Social Security – and not locking these surplus funds away – are the key to "saving" Social Security.

Policy adjustments to Social Security – and not locking these surplus funds away – are the key to "saving" Social Security.

Senate Budget Committee Chairman Kent Conrad (D-ND), in commenting on the current federal budget debate, observed that, "the real test for this Congress is whether or not we’re going to face up to our long-term challenges." The Chairman is absolutely right in directing the country to examine the long-term impact of its policy makers’ budget decisions. Before we can be prepared to deal with our long-term domestic challenges, however, we must correctly identify just what these challenges are.

Though our domestic policy makers are caught up in a struggle to lob at one another accusations of "destroying" Social Security, while working quickly to illustrate why their own plan will "save" it, neither side is doing nearly as much as it says it is to "save" Social Security … and neither is doing quite so much to ruin it. Saving, or, for that matter, bankrupting, Social Security has little to do with how we spend its massive surpluses over the next 15 years. The reason, put most simply, is that those surpluses are so large that the government cannot let them idle, while it waits for more of the country to retire and begin drawing on this social insurance policy. Policy adjustments to Social Security – and not locking these surplus funds away – are the key to "saving" Social Security.

Thus, given the current situations on our domestic, international, social and economic fronts, we must rethink our current strategies and realize that the Social Security surplus is not – and should not be considered to be – untouchable. Social Security funds must be spent on something – debt reduction, tax cuts, or programs for the current and future well-being of the country. Paying down our national debt reduces the amount of money we have to pay each year in interest costs, which frees up money from general revenues to pay for increased Social Security withdrawals and future domestic needs. In the meantime, it does nothing to begin addressing those current domestic needs. Tax cuts do nothing to directly lower our interest payments or to reduce our total national debt. They lower revenue, and thus limit our ability to address urgent domestic problems, all while providing very little – if any – help to the nation’s productivity or to increase the ability and number of workers to enter higher paying jobs. Only the third choice – investing now (to avoid paying even more later) to repair crumbling schools and roads, build a comprehensive public health system, provide job training to open up better paying and more gratifying job opportunities to low-wage workers, and provide health care to the millions of uninsured and underinsured Americans – offers a real return on this Social Security surplus money.

As Conrad noted, we must focus clearly on our country’s "long-term challenges." Unquestionably, these include ensuring Social Security remains the effective, protective safety net that it has been for the last 65 years. But, with so many additional pressing problems, the country cannot afford to hold to an arbitrary assignment of excess Social Security revenues to the sole purpose of debt reduction. In the current political environment, in which there is no common voice pushing for a freezing of the President’s $1.35 trillion tax cut to free up needed funds, it is time to reopen the debate about using Social Security’s excess funds to address current needs – doing so will not harm Social Security and it will likely put the country in a stronger position 35 years from now to address the problems we will face then.

For a more complete comparison of the three options currently available for the Social Security surplus, please see the full version of this analysis.