SID SALTER: Medicaid history exposes dangers of Social Security shift

By Sid Salter

STARKVILLE – The notion that Social Security remains the vaunted “third rail” of American politics might not be as rock solid as it used to be before the rise of the Tea Party, but it’s solid enough to remain a deciding factor in just which candidate rises to the top of the crowded Republic scrum for the right to try to unseat incumbent Democratic President Barack Obama in 2012.
In his op–ed this week on the subject of Social Security and the firestorm his “Ponzi scheme” characterization of the entitlement program generated, Republican Texas Gov. Rick Perry offered this shorthand in stating the problem: “These are the hard facts: Social Security’s unfunded liability is calculated in the trillions of dollars. Last year, annual Social Security outlays exceeded annual revenues for the first time since 1983. The Congressional Budget Office projects that outlays will be roughly 5 percent greater than revenues over the next five years, worsening as more and more Baby Boomers retire.”
Is Perry unfairly frightening retirees? Are his “Ponzi scheme” remarks the political equivalent of a false cry of “fire” in a crowded movie theater? Absolutely not, according to the Social Security program’s trustees. The 2010 Social Security Trustees report shows that over the next 75 years, Social Security owes $7.9 trillion more in benefits than it will receive in tax revenues.
In his 2010 book November 2010 book “Fed Up!: Our Fight to Save America from Washington” and again in the televised Tea Party debate in Florida on Monday , Perry has suggested that the states may well have a role in developing their own retirement security programs for their citizens as a solution to a Social Security program he has called a “failure.”
Again, the number makes Perry’s claims less politically incendiary as Social Security’s long–term shortfall increases by about $1.2 trillion each year because of the growing imbalance between retiree beneficiaries and younger working paying into the program. Social Security trustees report a $21.4 trillion unfunded liability.
That’s a far more ominous forecast than Congress uses to calculate the financial health of the program. And why wouldn’t Congress utilize different math? Congress systematically spent through the surplus funds paid in by workers for functions of government that had nothing to do with federal retirement benefits as a means of avoiding an honest accounting.
Congress further skews its reporting of Social Security’s shortfall by counting the $2.6 trillion in essentially IOUs the government has pledged to the program’s trust fund – which is the fiscal equivalent of paying off your credit card balance with another credit card.
And what about turning Social Security into a state function? What’s Mississippi’s track record with Medicaid? In flush times, Mississippi authorized a more generous Medicaid program than the Legislature ever actually funded. In hard times, lawmakers were forced to cut the program back – despite the fact that the federal government was paying the lion’s share of the freight on public health care in the state.
Admire Perry’s candor in honestly stating Social Security’s obvious problems. But be wary of embracing the solution of state governments – particularly state governments in poor states like Mississippi – taking on that program’s responsibilities. Social Security, like immigration, is ultimately a federal problem that requires a federal solution.
Sid Salter is a syndicated columnist. Contact him at 662–325–2506 or

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