In an interview with FOX News host Neil Cavuto on August 19, 2020, Kentucky Senator Rand Paul admitted that Social Security is running out of money and could be on the verge of running perennial deficits.
The Kentucky Senator was blunt about how the U.S. is running out of money. He told Cavuto that “There is no rainy day fund. There’s no savings account. You can’t go over the Federal Reserve and open a big safe door, find a bunch of money, and pass it out. The money will be borrowed, or the money will be printed.”
Paul thinks that excessive borrowing could have a cataclysmic impact on the economy, especially if Democrats take control of all branches of government.
He also raised a valid point about welfare transfer programs and the negative impact they have on work:
So, if you give people money, and you make it less painful to be in a recession, we can stay in a recession longer. The recession is created by the government. The government shut the economy.
Unlike most politicians, Paul recognizes that the government’s response to the Wuhan virus has caused this recession.
The most important part about this interview was when the topic of Social Security came up. Paul pointed out that Social Security is facing a $7 trillion deficit on an annual basis.
Trump recently signed an executive order that would have deferred payroll taxes for certain groups of Americans. Although politically this kind of reform makes sense during a pandemic when people are being displaced, the fact that this measure was carried out via executive fiat may open the door for further unilateral action on economic matters by future administrations.
That said, the U.S. is pretty much in a post-constitutional phase, so all parties will be abusing power no matter what.
The Trump administration at least does show some restraint on economic affairs and still believes in private property for the most part, especially when compared to its rivals. There will ultimately need to be a reset once the pandemic crisis and social unrest subsides, however.
Social Security is in a delicate position and will likely need to be reformed before it inevitably goes insolvent. Lower payroll taxes will just make its deficits grow higher.
Future administrations will have to take this into account and allow Congress to set aside reforms that protect seniors who have contributed to Social Security for decades, while giving young people the option to opt out.
Nevertheless, Rand Paul’s presence in the Senate does still bring some sanity and nuance to political discussions that is desperately needed in a time when all reasonableness has largely exited from the D.C.