Social Security's a Wreck! But Let's Not Rush to Fix It Or Anything

Speaking to seniors at the American Association of Retired Persons last week, President Obama described Social Security as a "bedrock commitment that America makes to its seniors" — a commitment he considers "unshakable."

What would his administration do to make good on that commitment? Right now, according to senior administration adviser David Axelrod, the answer is: nothing.

Asked twice by Time's Mark Halperin what the president's plan for fixing Social Security's finances was, Axelrod was baldly evasive, insisting that "this is not the time." Here's the full exchange:

MARK HALPERIN: "In a second term, what is the president proposing to do to reform Social Security, save it for future generations, and will it involve lower benefits for anyone or higher taxes for anyone?"OBAMA ADVISER

DAVID AXELROD: "Well I think that there, too, Mark, the approach has to be a balanced one. We've had discussions in the past. And the question is, can you raise the cap some? Right now Social Security cuts off at a lower point. Can you raise the cap so people in the upper incomes are paying a little more into the program? And do you adjust the growth of the program. That's a discussion worth having. But again we have to approach it in a balanced way. We're not going to cut our way to prosperity. We're not going to cut our way to more secure entitlement programs – Social Security and Medicare. We have to have a balance."

HALPERIN: "So what is his proposal?"

AXELROD: "Mark, I'll tell you what, when you get elected to the United States Senate and sit at that table — this is not the time. We're not going to have that discussion right now unless the Congress wants to sit at a table and says okay we're ready to move on a balanced approach to this. The reality of Social Security is this is a much less imminent problem than Medicare. We have extended the life of Medicare for close to a decade through the changes that we've made and Governor Romney wants to repeal. But Social Security is a more distant problem. One that needs a solution. But it isn't as pressing as a Medicare issue."

It's true that the fiscal problems posed by Medicare are larger than the fiscal problems posed by Social Security. But comparing the two is like comparing two terminal patients — one of whom is scheduled to die slightly earlier.

In 2010, the government announced that for the first time, it would pay more in annual Social Security benefits than it collected in Social Security taxes. The same thing happened in 2011, with the program running a $148 billion tax income to total cost deficit. The 2012 deficit is expected is expected to be even larger, around $165 billion. And there's no end in sight. The Trustees project that program costs exceeding combined tax and non-interest income will continue "throughout the short-range period and beyond." Starting in 2021, the program will begin to draw down its trust fund, which will be exhausted by 2033.

The trust fund, of course, is an accounting gimmick filled with IOUs that taxpayers will eventually be on the hook for. As Obama's own budget director, Jacob Lew, once explained, the program's trust fund does "not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures."

Since joining the administration, Lew has naturally adopted a more upbeat view of the trust fund, arguing that the program's "benefits are entirely self-financing. They are paid for with payroll taxes collected from workers and their employers throughout their careers. These taxes are placed in a trust fund dedicated to paying benefits owed to current and future beneficiaries."

Like Axelrod's remark, Lew's evolution is telling. President Obama occasionally pays lip service to the need to fix the Social Security's finances, but as with many of the nation's looming fiscal problems, the administration has basically taken the Alfred E. Newman approach: What, us worry? Maybe they'll get around to fixing things eventually. But now is not the time.