Michael Tanner

Question: How can you tell it’s a difficult campaign season for Democrats?

Answer: They are already running ads accusing Republicans of wanting to destroy Social Security and Medicare.

The Democratic Senatorial Campaign Committee is financing an Iowa ad saying that GOP nominee Joni Ernst has “proposed privatizing Social Security [and] gambling our savings in the stock market.”

In Arkansas, Senator Mark Pryor accuses his opponent, Representative Tom Cotton, of trying to “undermine the integrity of Medicare and Social Security.”

And in Kentucky, Democrat Alison Lundergan Grimes has ignored press criticism to launch a new round of attacks on Mitch McConnell for supporting the Ryan budget, which Grimes falsely claims “increases Medicare costs and privatizes Social Security.”

House campaigns are also featuring their share of Social Security and Medicare demagoguery: In Arizona’s second congressional district, Nancy Pelosi’s Democratic Majority PAC has run ads accusing GOP candidate Martha McSally of wanting to “raise the retirement age” and supporting “a plan that the AARP says privatizes Social Security in the stock market.” Similar ads are running in Florida and elsewhere.

As the election gets closer, we can undoubtedly expect still more.

In fairness, of course, it should be noted that it’s not just Democrats who peddle this nonsense. In Montana, the Republican senatorial candidate, Representative Steve Daines, is running an ad claiming that embattled Democratic incumbent Senator John Walsh “believes that privatizing Social Security should be on the table.”

Unfortunately for those candidates, the trustees for those troubled programs just injected some inconvenient truths into the debate.

Start with Social Security. Last year, the program spent $75.6 billion more than it took in. This year’s gap is expected to be more than $80 billion. This cash-flow shortfall is being covered by interest payments on the bonds in the Social Security Trust Fund.

Soon the interest payments will not be enough, and Social Security will have to make up any shortfall by redeeming bonds from the Social Security Trust Fund. But the Trust Fund holds no actual assets — it’s only government bonds held by the government itself, essentially an accounting measure of how much the system is owed out of general revenues. Thus, when the Social Security system redeems bonds in order to cover its deficit, the money to redeem them. like today’s interest payments, comes from general revenues, meaning that it simply increases our annual budget deficits and growing national debt.


Michael Tanner

Michael D. Tanner is a senior fellow at the Cato Institute, heading research into a variety of domestic policies with particular emphasis on health care reform, welfare policy, and Social Security. His most recent white paper, "Bad Medicine: A Guide to the Real Costs and Consequences of the New Health Care Law," provides a detailed examination of the Patient Protection and Affordable Care Act (Obamacare) and what it means to taxpayers, workers, physicians, and patients.