Video: Social Security isn't part of budget problem, says OMB director
Jacob Lew, director of the Office of Management and Budget (OMB), says Social Security 'is essentially a parallel issue.' But this doesn't mean policymakers shouldn't address its challenges.
Speaking Thursday at a Monitor-sponsored lunch for Washington reporters, the director of the Office of Management and Budget (OMB) said, â€śIt is often misunderstood. Social Security does not contribute to the deficit in the medium term â€“ in this 2015 to 2021 period. There is no need to deal with Social Security, and dealing with it would have at best negligible impactâ€ť on the nationâ€™s budget problems.
Late last year, the National Commission on Fiscal Responsibility and Reform headed by Erskine Bowles and Alan Simpson recommended a series of changes in Social Security, including a gradual increase in the retirement age.
But on Thursday, Mr. Lew argued, â€śThe reason to deal with Social Security is that it is a system where we have a tradition and history of making sure it is solidly funded for 75 years. At the moment, we look out and we see it is solidly funded until 2037. And we think it is important to make a commitment to current retirees and workers and future retirees that the system will be sound for the duration of the period." He added, "We want to work together on a bipartisan basis to do that.â€ť
As Congress and the White House focus on the budget deficit and the resulting accumulation of debt, Social Security â€śis essentially a parallel issue," Lew said. "It is important for it not to be confused as being either contributing to the problem or an essential part of the solution.â€ť
That is not to say Social Security doesn't pose a challenge to government policymakers, he said. Starting in 2037, the surplus in the Social Security trust funds will have been exhausted, the Congressional Budget Office says. Social Security taxes flowing into the funds would allow only 78 percent of expected benefits to be paid.
â€śThere is a very serious fiscal-policy question of, Are we running our overall fiscal policy such that we as a government can pay our bills?â€ť Lew said. â€śIt is time for the general fund to pay the Social Security fund back."
For many years, the government's general fund has borrowed from Social Security to fund ongoing operations. "It is not a Social Security problem; it is a general fiscal-policy challenge, and I think that is an important difference," Lew said.