Ehrlich on Washington column, July 7, 1996

MEWS FROM Robert L. Ehrlich, Jr. Second Congressional District of Maryland 1 407 York Road, Suite 304 Lutherville, Maryland 21093 EHRLICH ON WASHINGTON By Congressman Robert L. Ehrlich, Jr. 3 1 5 Cannon House Office Building Washington, D.C. 20515 Week of July 7, 1996 PROTECTING SOCIAL SECURITY A few weeks ago I told you about the “Truth in Budgeting Act,” a bill which I cosponsored and supported. This bill will ensure that the four federal transportation trust funds will at last be used for their intended purpose-urgently-needed improvements to our nation’s transportation infrastructure- rather than to mask the size of the federal deficit. Now I would like to tell you about my efforts to protect another important federal fund— the Social Security Trust Fund— from similar budgetary gimmicks. The Social Security system has experienced significant surpluses in recent years. According to Congressional Budget Office estimates, revenues paid by taxpayers into the Social Security system will exceed expenditures by an estimated $65 billion in 1996. This surplus is invested in a trust fund to help pay benefits for future retirees. That is the way the Social Security Trust Fund is supposed to work. Right now, however, the cupboard is bare as far as the Social Security Trust Fund is concerned. The Trust Fund now consists of IOUs instead of real assets. Money paid into the system by tomorrow’s retirees is instead being spent on today’s social programs. How did this happen? The government is “borrowing” money from the Social Security Trust Fund, writing IOUs in the form of non-negotiable treasury bills. These bills have no market value. They are merely a promise that the government will, some day, reimburse the Social Security Trust Fund. In essence, these bills are not worth the paper on which they are printed.