Strengthening Social Security and Medicare – Rhetoric and Reality in the 2000 Election
September 13, 2000. Remarks of Frank J. Mauro, Executive Director, Fiscal Policy Institute, at the retiree luncheon hosted today in New Paltz by the United University Professions, Capital District Region.
Many issues of importance to retired and soon-to-be -retired Americans are being fought out in this year’s election campaigns. Of these issues, the most important relate to the strengthening of Social Security and Medicare. I use the term “strengthening” to encompass both the protection of the benefits available under the current Social Security and Medicare systems, as well as the need to expand Medicare coverage in several ways. The expansion issue that is being addressed most seriously in this year’s campaigns involves the provision of assistance to seniors in meeting the high and increasing cost of prescription drugs.
Sometimes it appears that there is more heat than light being shed on these and other campaign issues. But, for better or worse, that is the nature of modern campaigns – particularly high-budget, media-dominated campaigns for national, statewide and congressional offices. Our job, as citizens, is to wade through the rhetoric as carefully as we can to identify, understand and examine the factual underpinnings of the candidates’ statements.
The context within which this year’s candidates for federal office are grappling with proposals for the strengthening of Social Security and Medicare, and with addressing other issues with fiscal implications, is an unusual one. In 1998, for the first time in 30 years, the federal government had an overall budget surplus (i.e., total receipts exceeded total outlays.). And in 1999, for the first time in 39 years, it ran a surplus in its so-called “on-budget” accounts. (NOTE: The on-budget accounts have only operated in the black during seven of the last 60 federal fiscal years: 1947, 1948, 1949, 1951, 1956, 1957, and 1960. It should be mentioned, however, that following the end of World War II the annual on-budget deficits were relatively small until the 1970s and that they did not really grow to substantial proportions until the 1980s.)
The federal government’s “off-budget” accounts, which are comprised overwhelmingly of the Social Security Trust Fund, have been running increasingly large budget surpluses since the early 1980s. This is the conscious result of the changes made in the Social Security system in the early 1980s to begin building up substantial reserves in preparation for the time when the Baby Boom Generation begins retiring.
As of December 31, 1999, the balances in the Social Security Trust Funds were $896.1 billion, up $133.7 billion from a year earlier. The latest projections by the Trustees of the Social Security and Medicare Trust Funds are that Social Security contributions (i.e., the payroll taxes paid by employees and employers, including self-employed individuals) will exceed benefits each year through 2015 and that contributions, income from the taxation of benefits and interest income will exceed benefits each year through 2024. This means that the balances in the Social Security Trust Funds are projected to continue growing until the end of 2024, when they will peak at a projected $6.047 trillion. (Note: this is $6 trillion of 2024 dollars, not adjusted for inflation to be comparable to current 2000 dollars.)
Beginning in 2025, under these projections, the Trust Fund will begin using portions of the accumulated $6 trillion surplus to pay benefits. It is then projected that the accumulated surplus will be used up by the end of 2037, at which time annual payroll taxes and the taxes on benefits are projected to equal about 71% of annual benefit payments, with this percentage declining to about 66% in 2075.
Warning #1: The Social Security System is not in crisis. Improvements are necessary, but radical changes are not.
These projections underscore the underlying strength of the Social Security system, but they also point out the long term problem that needs to be addressed. In doing so, it is important that voters not be taken in by exaggerations of the magnitude of the problem. In fact, the long-term solvency of the Social Security trust funds can be ensured by dedicating a modest percentage of the on-budget surplus to this cause and speeding up the rate at which we raise the cap on the amount of earnings subject to Social Security contributions. This would allow us to “save” Social Security without any increases in the retirement age over and above the increases that are already scheduled to take effect and without any benefit reductions. The people who advocate increasing the retirement age as a way to close Social Security’s projected shortfalls are in white collar jobs that they could easily continue to do through their late 60s or even into their early 70s, but they have their blinders on when they imply that most waitresses, nurses aides and carpenters can continue to ply their physically demanding trades at those ages.
It is also important to note that, in the last several years, the projections as to the future health of the Social Security system have been improving steadily. Voters would clearly be able to make more informed decisions about alternative Social Security “reform” proposals if they knew that each of the last three annual reports by the Trustees of the Social Security and Medicare Trust Funds concluded that the system was in better shape than the prior year’s report had projected. Since their 1996 report, the Trustees have revised from 2020 to 2025 their projection of the year in which payments are first likely to exceed income. Their projection of the year in which the trust fund surplus is projected to be depleted has been extended from 2029 to 2037. And, the projected overall funding shortfall (over the course of the 75-year period for which the Trustees are required to make their projections) has been reduced from 2.23% to 1.89%.
According to the Economic Policy Institute, however, the latest projections are still based on pessimistic assumptions about the future economy. According to EPI’s analysis of the 2000 Annual Social Security and Medicare Trust Funds Reports, “Recent developments suggest higher real GDP and productivity growth than the trustees assume. Hence, real wage and payroll-tax revenue growth should be greater than predicted by the trustees’ report, increasing the size of the trust fund. Given the report’s improved forecast in spite of these pessimistic assumptions, there is even less need to cut benefits or to privatize the system.”
So, in deciphering this year’s election campaign rhetoric, Warning #1 is to be wary of claims that Social Security is in crisis. It is not. Warning #2 which is a direct corollary of this first warning is to be wary of claims that radical “solutions” that would dismantle this most effective of all safety net programs are necessary in order to save it. As we will see, such “solutions” are not only unnecessary, they serve to make the situation worse.
Warning #2: Diverting a portion of Social Security revenues to private accounts makes it harder rather than easier to eliminate the budget shortfalls projected for 2038 and thereafter.
Some supposed “experts” are offering “privatization” as the remedy for all that ails the Social Security system. In reality, however, allocating a portion of Social Security contributions to private accounts would make it harder rather than easier to solve the Social Security problem that most Americans care about: ensuring the long term solvency and stability of the system without cutting benefits or increasing the retirement age.
Proposals to allow workers to divert a portion of their Social Security contributions to individual accounts would greatly increase the difficulty involved in balancing the system’s revenues and expenditures over time. If, under the current rules, revenue increases and/or expenditure decreases of a given amount are necessary to ensure the system’s solvency over time, then even greater revenue increases and/or expenditure decreases would be necessary if a portion of the current revenue stream were diverted to private accounts.
Under Governor Bush’s proposal, for example, workers would be allowed to divert a portion of their Social Security contributions to private accounts, with that portion being 2% in the examples that his campaign has provided. This would mean that for those workers, a little more than 16% of their contributions would go to individual accounts rather than to the overall Social Security Trust Fund. This would create a particular challenge for the system’s solvency since Social Security is a pay-as-you-go system in which current revenues are used to pay current benefits.
If half of all workers (or some smaller portion of workers with higher than average earnings and half of all taxable earnings) took this option, then about 8% of Social Security contributions would be diverted from the Trust Fund, with virtually no material reduction for many years in the amount of benefits to be paid. The result would be a reduction of about $40 billion in revenues in each of the next several years, growing to about $50 billion per year in current 2000 dollars over the course of the ensuing decade. By reducing the system’s annual revenue, such a change would also be reducing the system’s accumulated surpluses at the end of each year, by ever increasing amounts, given the power of interest compounding. This would put the system into the red sooner than under current law and increase the percentage by which revenues fall short over time of expenditures. (A more sophisticated analysis by Princeton University Economics Professor Alan Blinder, a former member of both the Council of Economic Advisors and the Board of Governors of the Federal Reserve Bank, and several other highly respected economists, concluded that if everyone who is younger than 55 in 2002 opted to have 2% of their earnings go into a private account, that the amount available to be spent on basic benefits over the ensuing 75 years would have to be reduced by 41%, over and above any benefit reductions necessary to cover the 1.89% revenue shortfall, that is currently projected by the Trustees for this period. This analysis also concluded that the benefits from the private accounts, thus established, would only cover about half of the reduction in basic benefits.)
Many investment firms that want a “piece” of the individual or private accounts business have been obscuring these realities – either directly and/or through the funding of one of several advocacy organizations that have been established to advance this concept. A refreshing exception has been John Bogle, the founder of the Vanguard Group of mutual funds, who has emphasized the clear reality that, “Diverting part of the existing tax flow earmarked for Social Security, as Bush recommends, will only deplete the programs’s reserves faster than the experts are predicting.” (Prial, Dustin, “Vanguard founder offers another view on Social Security,” Associated Press, August 29, 2000.)
Warning #3: Be wary of plans that promise to use the surplus to strengthen Social Security and Medicare but also promise to use over $1.5 billion to cut taxes and/or increase spending for other desirable purposes.
It seems that every candidate for federal office from George Bush and Al Gore on down says that he or she wants to use the federal government’s projected budget surplus to protect Social Security and pay down the national debt, and virtually every candidate says that they also want to use some of the surplus to provide a tax cut to the American people who, after all, created the surplus. Voters, however, must carefully examine candidates proposals for reducing taxes and increasing spending to determine if they can really be implemented without jeopardizing Social Security and Medicare and without driving up (rather than paying down) some of the national debt.
As an example, I have taken a careful look at the proposals by U. S. Representative and current U. S. Senate candidate Rick Lazio, since he recently did a pretty good job, in an August 24, 2000 speech, of laying out an overall framework for evaluating plans for using the federal budget surplus. In this speech, Rep. Lazio argued that “our most important economic duty is to take a balanced, financially responsible approach to managing the budget surplus.” He then went on to define such an approach as “one that protects Social Security, and Medicare, reduces the national debt and provides pro-growth tax relief.”
In this same speech, Representative Lazio announced what he called a “Balanced, Fiscally Responsible Plan to Extend Economic Expansion Across NY.” In the various documents that he released announcing and explaining his plan, however, Rep. Lazio never explains how his plan meets this test of balance and fiscal responsibility. He simply calls his plan balanced and fiscally responsible thus implying that it meets this definitional test.
In attempting to sell his plan as fiscally responsible, Rep. Lazio used two techniques.
- First, he went to great lengths to picture his plan as using only a modest portion ($776 billion over ten years) of the projected surplus (which he characterized as having been conservatively estimated at more than $4.4 trillion over that same period).
- Second, he explicitly compared his estimate of his own plan’s size (the $776 billion figure) to the size of the tax reduction plans being advanced by presidential candidates George Bush and Al Gore. His purpose was to have listeners and readers see his plan as being a lot smaller than the plan proposed by George W. Bush ($1.3 trillion over ten years), and only a little bit bigger than the plan proposed by Al Gore ($500 trillion over ten years).
Without the time for any analyses, the initial media coverage of Lazio’s speech and his plan bought the line that he was selling. The New York Times, for example, headlined it’s August 25th story on Lazio’s speech, “With His Tax Cut Plan, Lazio Distances Himself From Bush.” As Rep. Lazio’s plan was analyzed, however, it became clear that it would cost much more than the initial $776 billion estimate. In response to questions about this seeming inconsistency, Rep. Lazio’s campaign staff indicated that some of provisions of his plan would be less generously framed than his speech and supporting documents had indicated, and that some would be phased in more gradually than might normally be the case. This led to a number of follow-up stories in various newspapers, including one in The New York Times, on September 7th, entitled, “In Two Weeks, Lazio’s Tax Plan Undergoes Deductions of Its Own.”
In his August 24, 2000, economic policy speech, Rep. Lazio said that “over the next decade, the federal government is expected to run a budget surplus of more than $4.4 trillion” and that his tax reduction plan would only cost $776 billion over that same period. The clear implication of this juxtaposition was to emphasize that Rep. Lazio was suggested than only a very small portion of a very big surplus be returned to the people in the form of tax cuts. So, how could anyone conclude that this was not fiscally responsible. After all, Rep. Lazio is only suggesting that 17.5% of this dividend be returned to the people in the form of tax cuts. That would leave fully 82.5% of the surplus, or $3.785 of the surplus to protect Social Security and Medicare, reduce the national debt, and maybe even meet some other needs, wouldn’t it? Unfortunately, the answer to that question is “no” for the following reasons:
a. The surplus available for tax cuts and deficit reduction isn’t really $4.4 trillion since more than 50% of the total projected surplus is in the off-budget Social Security Trust Fund. “Only” $2.2 trillion, not $4.4 trillion, is available for protecting Medicare, reducing the national debt and addressing some of American society’s other unmet infrastructure and human needs.
To begin with, the Congressional Budget Office’s latest projection of the federal budget surplus for the next ten years is actually a little higher – $4.561 trillion. But, of that amount, $2.388 trillion is in actually in the Social Security trust fund. The remaining $2.173 trillion is the projected on-budget surplus that is available for protecting Medicare, reducing the national debt and addressing some of American society’s other unmet infrastructure and human needs. So, even if Rep. Lazio’s $776 billion estimate of the cost of his tax cut proposals were correct (which it is not), it would represent 36% of the surplus available for tax cuts and other purposes other than protecting Social Security. In reality, as is outlined below, the true impact of Rep. Lazio’s plan on the surplus is much greater, reducing it by $1.399 billion, and thus using over 64% of the non-Social Security surplus for this one purpose. This moves his plan from the realm of fiscal responsibility to that of fiscal irresponsibility, especially when we remember that the surplus is a “projected” surplus based on assumptions about the economy that allow CBO to project that federal revenues will grow between 4% and 5% during each of the next ten years. While this might not actually happen, a 10-year phased-in tax cut would establish a legal commitment to forego an increasing amount of revenue each year and that commitment could only be changed by Congressional action. This is not to say that the Congress might not be justified in enacted some tax cuts in the face of the projected surplus, but that it should do so judiciously, without extremely long phase-in periods which are, in effect saying, that we absolutely know that we will be able to afford something in 2003 or 2005 or some other future year that we cannot afford now.
b. The on-budget surplus includes $360 billion attributable to Medicare, further reducing the amounts available for other purposes.
Despite Representative Lazio’s recognition of the importance of protecting Medicare as well as Social Security, he never acknowledges that, according to the Congressional Budget Office projections on which he relies, some $360 billion of the on-budget surplus is really attributable to the Health Insurance (Medicare) Trust Fund. Setting aside this portion of the on-budget surplus for the protection and strengthening of Medicare, reduces the portion of the surplus available for uses other than Social Security and Medicare to $1.813 billion. If Rep. Lazio’s $776 billion estimate of the cost of his tax cut proposals were correct (which it is not), it would represent 43% of the surplus available for tax cuts and other purposes other than protecting Social Security and Medicare. In reality, as is outlined below, the true impact of Rep. Lazio’s plan on the surplus is much greater, reducing it by $1.399 billion rather than $776 billion, and thus using over 77% of the non-Social Security, non-Medicare surplus for this one purpose.
In the budget proposals that it currently has pending before the Congress, the Clinton Administration has proposed to change the categorization of the Health Insurance Trust Fund so that it would be considered off-budget, like the Social Security Trust Funds. According to the President’s Mid-Session Review of the budget for FY2001, this change is intended to ensure that Health Insurance surpluses over the next ten years “are not used for other purposes .”
NOTE: According to the Congressional Budget Office’s An Analysis of the President’s Mid-Session Review of the Budget for Fiscal Year 2001, “That proposed accounting change would have no effect on the economy. It would reduce on-budget surpluses while correspondingly increasing off-budget surpluses, but it would not, by itself, reduce the debt or change the government’s financial position. However, if the Congress and the President agreed to avoid on-budget deficits in future years, that accounting change might make the surpluses generated by the HI program (and any additional transfers from the general fund) less vulnerable to proposals to increase spending or reduce taxes. If taking the HI trust fund off-budget thereby increased the likelihood of maintaining projected budget surpluses and paying down debt held by the public, it would enhance long-term economic growth.” (Emphasis added, not in original.)
The reference, in the above excerpt from the CBO’s analysis of the Mid-Session Review, to “any additional transfers from the general fund” refers to the Administration’s proposal to transfer an extra $115 billion to the Health Insurance Trust Fund from the federal government’s on-budget accounts over the next ten years. The CBO concludes that such transfers would add to the Health Insurance Trust Fund’s balances and make the Medicare program appear more “solvent” but that balancing the revenues and expenditures of this program in the long run is a more substantial challenge.
If Rep. Lazio supported this idea of assigning additional on-budget surpluses to the Health Insurance Trust Fund, that would further decrease the amount of surplus funds available for purposes other than protecting Social Security and Medicare. If the President’s proposal as it currently stands were adopted, it further reduce the portion of the projected surplus that is available for uses other than Social Security and Medicare from $1.813 trillion to $1.698 trillion.
c. The tax cuts proposed by Rep. Lazio will cost $1.121 trillion over ten years, not $776 billion.
The $776 billion figure turns out to be a significant underestimate of the ten-year cost of the tax cuts proposed by Rep. Lazio. A conservative estimate of the cost of these tax proposals over the next ten years, even with some of the after-the-fact “amendments” by the Lazio campaign staff to reduce their cost, is $1.121 trillion over the next ten years. Rep. Lazio’s campaign has acknowledged that it used outdated estimates for its proposal to reduce the portion of Social Security benefits subject to taxation (a difference of $60 billion) and that its 10-year cost figures for some of the other proposals assumed either that they would sunset after four or five years (a difference of $204 billion for the proposal to eliminate the marriage penalty) or that they would be phased in so gradually that the promised benefits would not be available until 2010 (a difference of at least $200 billion for the proposal to make employees’ Social Security contributions deductible of their personal income tax returns).
The campaign has also said that, while it wasn’t specified in Rep Lazio’s speech or in any of the briefing documents released by the campaign, that the Social Security payroll tax deductibility provision would not be available to taxpayers in tax brackets higher than 28%.
NOTE: The federal personal income tax has five brackets: 15%, 28%, 31%, 36% and 39.6%. The income thresholds for each bracket are changed annually based on an inflation index. For married couples filing joint returns in 2000, those five brackets will apply, respectively, to the portions of taxable income [income after deductions and exemptions] above $0, $43,820, $105,950, $161,450, and $288,350. Thus, in 2000, not making the Social Security payroll tax deduction available to taxpayers with any income in the 28% bracket would mean that this deduction would not be available to married couples with taxable incomes above $105,950 or single taxpayers with taxable incomes above $63,600.
While this “clarification” helps to trim the costs of his proposed tax cuts, it also renders incorrect the line used in both Rep. Lazio’s speech and some campaign commercials that this proposal “will reduce the average two-income family’s tax bill by about $1,200 per year.” This line is really a misleading characterization of the fact that the average savings to be realized by all 2-earner families under an across-the-board payroll tax deductibility provision would be about $1,200. So even for an across-the-board payroll tax deductibility plan this is a misleading statement. For such a plan there is a big difference between the savings to an average two-income family (about $530, see next paragraph) and the average savings to all two-income families (the $1,200 figure) since the latter average is heavily weighted by the savings that would go to many two high-earner families ($3741 in 2000). With the campaign’s after-the-fact revision of the plan (limiting it to those in the 28% or 15% brackets), this statement is now both misleading (which it was originally) and incorrect.
The median income for a 4-person family (two parents, two children) in the United States is about $56 thousand per year and for such families in New York State it is about $57 thousand. If all of the income of such a New York family was from wages and salaries subject to the Social Security payroll tax, the benefit of Rep. Lazio’s proposal, when fully phased in ten years from now, would be about $531 in current dollars, assuming that median family incomes keep up with the cost of living in New York State over the next ten years, something that they have not done over the last ten years. Under the slow phase-in that Rep. Lazio has not enunciated to try to make his plan fit into his cost estimate of $776 billion over ten years, such a family would probably see benefits of $50 to $100 for the next several years.
d. The impact of the tax cuts on the surplus is greater than the savings to taxpayers because of the increased interest costs that would result from a slower reduction in the amount of debt outstanding.
Both Rep. Lazio’s estimate ($776 billion) and the more accurate estimate ($1.121 trillion) are estimates of the amount by which the proposed tax cuts would reduce federal revenues over the next ten years. They are not estimates of the effect that this plan would have on the projected surplus. The difference is that the CBO’s projection of the surplus assumes that the surplus simply accumulates, earning interest. This is, in effect, the same as saying that, if the annual surpluses are not used for tax cuts or spending increases, they will go to reducing the national debt and that this, in turn, will reduce the amount of the federal budget that will go to interest payments in the following year thus making that subsequent year’s surplus greater than it otherwise would have been. When the impact that the annual phase-in of Rep. Lazio’s tax cut plan on the national debt and, therefore, on annual interest payments is taken into consideration (using CBO’s interest calculation methodology and assumptions), the projected surplus over the next ten years is reduced by an additional $278 billion. Thus, while Rep. Lazio’s tax cuts are estimated to cost $1.121 trillion over the next ten years, their impact on the surplus is to reduce it by a total of $1.399 trillion (the $1.121 trillion direct cost of the tax cuts plus the $278 billion in interest) or 77% of the projected non-Social Security, non-Medicare surplus of $1.813 trillion. (If any of the $1.813 trillion were to be used to further protect Medicare, such as with the Clinton Administration’s proposal to use $115 billion of the non-Social Security, non-Medicare surplus for this purpose, the potion of the surplus “used up” by Rep. Lazio’s tax cuts would be even greater. That percentage would be over 82% if the Administration’s proposal were adopted.)
e. If all of Rep. Lazio’s other proposals for tax reductions and spending increases were implemented, there would be no surplus moneys available to reduce the national debt or to strengthen Social Security and/or Medicare. In fact, we would have to choose between using some of the Social Security and Medicare Trust Fund’s own surpluses to balance the regular budget OR actually increase the national debt.
While an argument could be made for increasing the national debt in certain situations, to plan to do so would certainly be inconsistent with the principles for using the surplus that Rep. Lazio set forth in his economic policy speech and with the approaches being set forth by most other candidates for federal office, including Al Gore and George Bush. So it is quite surprising that Rep. Lazio’s other proposals for tax reductions and spending increases more than use up more than the $414 billion that is left after setting aside the projected surpluses in the Social Security Trust Fund ($2.388 trillion) and the Medicare Trust Fund ($360 billion), and after taking into account the impact ($1.399 trillion) of his August 24th tax reduction plan on the projected surplus. (This $414 billion would be reduced to $299 billion, if the Administration’s proposal for using $115 billion to protect Medicare’s future is accepted.)
Education. While the details of Rep. Lazio’s education plan may or may not stand up to careful scrutiny, it will, by his accounting, cost $97 billion over ten years, thus reducing the amount of the projected non-Social Security, non-Medicare surplus available for debt reduction and other purposes to $317 billion (or $202 billion if the Administration’s proposal for using $115 billion to protect Medicare’s future is accepted.)
Gasoline Taxes. Rep. Lazio’s proposal to suspend the federal gasoline tax for six months and then to reduce it by 4.3 cents per gallon would cost at least $50 billion over ten years, thus reducing the amount of the projected non-Social Security, non-Medicare surplus available for debt reduction and other purposes to $267 billion (or $152 billion if the Administration’s proposal for using $115 billion to protect Medicare’s future is accepted.).
Telephone Taxes. The repeal of the 3% federal tax on local and long distance telephone calls, that Rep. Lazio and most other members of Congress support, is estimated to reduce federal revenues by about $55 billion over the next ten years, thus reducing the amount of the projected non-Social Security, non-Medicare surplus available for debt reduction and other purposes to $212 billion (or $97 billion if the Administration’s proposal for using $115 billion to protect Medicare’s future is accepted.).
Prescription Drug Program. The Congressional Republicans’ prescription drug plan which Rep. Lazio has supported would reduce Federal revenues by an estimated $159 billion over ten years, thus reducing the amount of the projected non-Social Security, non-Medicare surplus available for debt reduction and other purposes to $53 billion (or a negative $62 billion, i.e., an increase rather than a decrease in the national debt of this amount, or a use of the Social Security and/or Medicare surpluses of this amount or some combination of the two, if the Administration’s proposal for using $115 billion to protect Medicare’s future is accepted.).
Other Proposals. Without even adding up all of the other uses of the surplus that Rep. Lazio has endorsed, proposed or voted for, the surplus will be more that “used up” by these three: The so-called New Markets Initiative bill that Rep. Lazio voted for in late July would cost an estimated $16 million over ten years, while the Congressional Republicans’ Health Insurance Access bill would add another $69 billion, and the tax proposals (other than the marriage penalty provisions and the repeal of the estate tax) that were included in his minimum wage increase bill would cost at least $35 billion over the ten year period. Combined, these proposals would require $120 billion over ten years. This is $67 billion more than the $53 billion that was left after accounting for the prescription drug program. (The result is over-promising of $182 more if the Administration’s proposal for using $115 billion to protect Medicare’s future is accepted.).
While some of these provisions may be meritorious, they add up to a more than complete use of a “projected” budget surplus thus jeopardizing the other articulated goals of protecting Social Security and Medicare and reducing the national debt.
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All voters who are concerned with the well-being of retired Americans, should carefully review the proposals that are being put forward during this election season. It is essential that we consider those proposals with an understanding of the true financial situation of the Social Security Trust Fund, an understanding of the fact that resources used to fund private accounts reduce the overall solvency of the Social Security system, and an understanding of the fact that implementing proposals to “use up” the projected non-Social Security, non-Medicare surplus for other purposes (whether they be judged worthy or not worthy on other criteria) makes it impossible to protect Social Security and Medicare, let alone to reduce the national debt.