Today the House overwhelmingly passed H.R. 1259, the “Social Security Lock Box Act,” which prohibits official government entities from using the Social Security surplus to mask the size of the on-budget deficit and establishes “points of order” (allowing Members to halt pending legislation) against considering any measure that would use Social Security surpluses for any purpose other than reforming Social Security and Medicare.
“H.R. 1259 is very similar to the ‘Honesty in Budgeting Act’ that I introduced earlier this year,” Smith explained. “I am proud to see the House of Representatives take various similar ideas and combine them into one bipartisan bill to protect the Social Security surplus from being used for other purposes.”
Smith says the problem is the government has used the Social Security surplus for other purposes and counted it as income for many years. “That’s very misleading, because that money is not income – it’s borrowed, and it has to be paid back plus interest,” he said. “The first step towards ending this practice is to be honest with the American public and stop using the Social Security surplus to mask the true size of the deficit. That was the primary goal of my ‘Honesty in Budgeting Act’, and the legislation passed today will help get us there.”
“Requiring CBO and OMB to exclude Social Security figures from their official reports is a key step in changing the perception that we have a budget surplus,” Smith continued. “For example, although we’ve heard pronouncements that we had a $70 billion surplus in 1998, that just isn’t the case. We had a $99 billion surplus in the Social Security trust fund and a $29 billion deficit for the rest of the government. Since we have to pay that $99 billion back to Social Security, we don’t have a $70 billion surplus — we have a $29 billion deficit.”
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Latest CBO budget figures, released on February 1, project the U.S. will have a non-Social Security surplus of $800 billion in the next ten years. “Real surpluses are obviously welcomed,” Smith said. “The point of my bill is to clarify the numbers and make it easier for citizens to understand how much money truly have in the bank.”