Reid and Pelosi write a letter

Dear Mr. President:

We are writing today to urge you to publicly express your commitment to pay back the Social Security Trust Fund for all Social Security payroll taxes diverted for other purposes. This would ensure Social Security's solvency until 2052, according to the non-partisan Congressional Budget Office.

As you know, as a result of bipartisan legislation signed by President Reagan in 1983, Social Security has been accumulating huge annual surpluses in preparation for the retirement of the Baby Boom generation. American workers were promised that if they paid payroll taxes beyond those required to pay for current benefits, the surpluses would be invested in securities backed by the full faith and credit of the United States. These securities would be redeemed to pay guaranteed benefits as the baby boomers retired.

Despite this commitment, statements by you and other members of your Administration have raised questions about whether the government will honor its Social Security obligations.

Just last week you said:

"By the way, we don't have a trust in Social Security...what happens is we take your money, we pay money out for the promises for those people who have retired, and if we've got anything left over, we spend it on things other than Social Security....And what's left are a pile of IOUs, paper." [Cedar Raids, Iowa; 3/30/05]

This type of statement is highly misleading and dangerous. It is simply wrong to suggest that the Social Security Trust Fund does not exist, or that the securities held by the Trust Fund are merely pieces of paper. For a President to even suggest that the federal government might, for the first time, default on a security backed by the full faith and credit of the United States unnecessarily misleads American workers about the health of the Social Security program.

Just as significantly, these statements could raise needless doubts among American and foreign investors about the United States' willingness to meet its fiscal obligations. This has potentially broad ranging and damaging implications for our economy.

It is especially unwise to raise doubts about the full faith and credit of the United States at a time when the federal government is running historically large and unsustainable deficits. These deficits are forcing the U.S. government to borrow hundreds of billions of dollars from foreign governments and investors. If these investors lose confidence in U.S. securities, Americans will be forced to pay higher interest rates to service our growing debt.