Most (perhaps all) private companies do not have to pre-pay retiree benefits, but then again, most companies don’t get a government-protected monopoly on mailboxes, an exemption from property tax, and a waiver for vehicle registration fees. Most private companies haven’t borrowed $10 billion from the Treasury. Can we really blame the Treasury for wanting that money back? For wanting that money back, in installments, over time? Can we blame the Treasury for providing a loan and then managing it the proper way?
We have been here before. A year ago, the postal service was in this same spot: about to hit its debt limit, and unable to pay what was owed to the Treasury. What did we do about it? We kicked the can down the road. Congress passed a resolution delaying the deadline by which the postal service had to pay up.
We can debate the details of the USPS all we want, but we ought to be focusing on the pattern that the USPS default follows. The problem at the Post Office is a mandate to pay retirees that cannot be fulfilled because the agency is broke. These payments represent a fraction of the Postal Service’s activity. But the very same thing -paying retiree benefits- represents just about all of what the Social Security Administration does.
The Social Security Administration can’t exactly decide to raise revenue on its own (that would mean a tax hike – which would require Congress to act). Similarly, the Post Office cannot raise fees without the approval of a regulatory agency. The Post Office can consider cutting certain services, though not all cutbacks would be approved – Social Security can’t exactly decide not to send out checks every
month. The Social Security Administration is partially removed from the free market, just like the Postal Service is.
Social Security is in trouble. Just like with the USPS, we dealt with this last year. The government couldn’t make the payments it was supposed to – payments like Social Security – unless it borrowed more money. We kicked the can down the road by raising the debt ceiling. It must be nice to be the government– every time you hit a wall, you can just move the wall and keep on going! It’s like a Choose-Your-Own Adventure, except Congressional inaction chooses the adventure for you, and the adventure is awful. So, that is to say, not like Choose-Your-Own Adventure at all.
Social Security is still falling down into the debt spiral. But the postal service is showing us that default can happen to government agencies. It will be far more expensive to fix USPS now, than it would have been to fix it before it racked a huge debt. It’s easier to crawl out of a hole when the hole is shallow… and very difficult when the hole is billions of dollars deep. This sets a frightening precedent for Social Security. We should get Social Security on a path to solvency now, before it, too, has to default. Some restructuring pain now might just be able to save Social Security from genuine crisis down the road. Because when we ship a government agency to hell in a handbasket, the postage is devastatingly high.
Angela Morabito (@_AngelaMorabito) joined TheCollegeConservative as the Director of Public Relations from Georgetown University's School of Foreign Service in Washington, DC, where she studied Culture and Politics. She completed an internship at the Society for International Development and served as the Communications Director for DC/Virginia Students with Newt. Additionally, she served as the Public Relations Director for the Hilltop MicroFinance Initiative, Inc., the second-largest student-run micro-lending group in America. Her work has been featured by Michelle Malkin, Rush Limbaugh, CSRWire, FastCompany, and many others. Angela Morabito is a native of Marietta, Georgia.
She now serves on TCC's Executive Board.