Every week, 2,000 - 3,000 Second District residents write to me about the issues pending before Congress, and I work hard to respond to each person as promptly and thoughtfully as possible. On this "Letter of the Week" blog, I highlight constituent letters that are of general interest. If you'd like to share your own views, please feel free to e-mail me at any time!

Dear Nancy,

We are hoping you support passing new Social Security Preservation Act (H.R. 219). This is very important to us.

Thank You Nancy.

Paul in Lecompton, KS.

Dear Paul,

Thank you for writing me about the Social Security trust funds.  I want you to know that I share your commitment to preserving Social Security, and I'd like to let you know the steps I've taken to make sure that the Social Security benefits Kansans are earning today will be available for them when they retire.

Most of the Social Security taxes paid by people working today go to pay benefits being paid to people currently drawing on Social Security.  When today's workers retire and begin drawing on Social Security, most of the money that they are paid will come from the people working at that time.

This seems like an odd set up.  First, it depends on there being enough workers to support retirees.  However, as people live longer, the number of retirees is growing much faster than the number of workers.  Second, it's different from a pension.  In a traditional pension plan, the money you receive in retirement is money that your company invested for you while you were working.  That way, even if your company disappears, you can still depend on a pension payment in old age.

Unfortunately, Social Security probably can't be set up like a pension plan.  For one thing, we need money to pay current retirees.  The money they paid in when they were working went to the retirees at that time.  They need the money paid in by today's workers to receive the benefits they are entitled to.  This is why I oppose allowing today's workers to divert their money into private accounts – it would leave today's retirees high and dry.

The other reason that Social Security can't be set up like a pension plan is that it's just too big.  Social Security takes in hundreds of billions of dollars each year.  If all of that money was invested for current workers' future payments, Social Security would soon own all of the stocks and bonds in the United States.  I don't think that having the government own all the private businesses worked out very well for the Soviet Union, and I don't think it's a good idea for us.

So, if we're going to pay today's retirees with money from today's workers, how do we best prepare for the future when we have more and more retirees compared to the number of workers?  Today's workers pay in more money than is needed to pay today's retirees.  What should we do with the surplus?

Right now, the money is invested in special Treasury bonds that will be redeemed when Social Security needs the money in the future.  We need to keep Social Security funds safe, and Treasury bonds are the safest investment in the world because the U.S. economy is the biggest and most stable in the world.

However, we need to make sure that those bonds truly are safe – that the money will be there when Social Security needs it.  When Social Security buys Treasury bonds, it is essentially making a loan to the government.  And that’s not necessarily a bad thing.  If the government had used that money to pay down other debt or making investments in the economy, it could be a good deal for both sides.

Unfortunately, that is not what has been happening.  Congress basically treated the loan from Social Security as free money.  Instead of paying down other debt, they used the Social Security surplus to hide how much money they were actually borrowing.  Did you know that when the Congressional Budget Office (CBO) reports that the government ran a $400 billion budget deficit in last year, it's actually worse than that?  The actual budget deficit was $580 billion, but the $180 billion surplus in Social Security gets added in to make everything look sunnier than it is.

I think we need to end this practice.  That’s why I have signed on as a co-sponsor of the Social Security Truth in Budgeting Act, H.R. 1353.  This bill was introduced by Dennis Moore, who represents Kansas’ 3rd District.  It would eliminate Social Security as an offset in the budget thus making it impossible for the Social Security trust funds to be used to hide the true size of the federal deficit.

The most important thing that we can do to make sure that Social Security is around in the future is to get our budget into balance.  The Bush Administration has increased our national debt by almost as much as all the previous administrations put together.  This is a disastrous course.  We have to turn this around.

We need to return this country to long-term budget balance – running surpluses in good times to cushion against the inevitable bad times.  It's not going to be easy, but it is the right thing to do.  If, instead of borrowing more and more every year, we started paying down our debt, I think we'd be able handle the Social Security Trust Fund redemptions.

What gives me confidence is that we've been through this before.  In the 1970s and early 1980s, the Social Security Trust Fund redeemed almost all of the Treasury bonds it had built up during times of surplus.  The federal government had no problem handling those redemptions.

What concerns me is that, at that time, our national debt was 30 percent of GDP whereas today it is over 70 percent.  Our debt burden hasn’t been that high since we were selling war bonds to pay for World War Two.  I have included a chart with this letter.  I hope you’ll agree we have to get that number back down.  I have been adamant about ending deficit spending and taking the government back to a pay-as-we-go system.

For over sixty years, Social Security has represented a promise to America's seniors of security in retirement.  It has been one of our most successful programs.  Today, over 450,000 Kansans receive monthly Social Security benefits; I know that hundreds of thousands more are counting on these programs to help provide income in the future.  I am committed to preserving the program’s basic guarantee – a stable, predictable stream of benefits – and protecting the trust funds that fund those benefits.

Very truly yours, 

Nancy Boyda
Member of Congress