Hocus Pocus Social Security funding
If we ran our personal finances the way Bush wants to run the government, we’d be in jail. (Reuters):
Facing record budget deficits, the Bush administration probably will turn to short-term government borrowing to help finance its plan to add personal retirement accounts to Social Security, officials said yesterday.
President Bush’s economic advisers have been analyzing financing options for more than a year in preparation for Bush’s second-term push to overhaul Social Security. Officials say no final decisions have been made.
Bush’s advisers contend that a short-term increase in borrowing probably will be necessary to finance the transition to private accounts. They say that this increase is economically feasible and that the long-term cost of doing nothing would be far greater.
Although the nation’s debt load would increase initially, it would fall as the changes are phased in, advocates say. ”In talking about moving some of those costs forward to make some reform to the system, it may ultimately involve some borrowing in the short-term,’ said Chad Kolton, spokesman for the White House Office of Management and Budget.
An analysis this year by the White House Council of Economic Advisers found that tapping the bond markets to pay for private accounts would increase the nation’s debt-to-GDP ratio by 23.6 percentage points by 2036. The GDP is the gross domestic product.
Under this strategy, the debt held by the public would increase by as much as $4.7 trillion.
…Bush opposes raising taxes or requiring additional contributions from workers.
The White House had once hoped that budget surpluses, projected in 2000 at $5.6 trillion over 10 years, would fund the transition period. But the surpluses have vanished.
The federal budget deficit hit a record $412 billion in the 2004 fiscal year that ended Sept. 30. And the Congressional Budget Office has projected $2.3 trillion in accumulated deficits over the next decade.