By a strange coincidence, the National Review had an article yesterday advocating the same approach to Social Security that the Republican Congressional leadership just adopted. It's too completely disingenuous to merit fisking, but it does contain one crucial falsehood that it's important to point out:
"The gradual phase-in of personal accounts funded by the surplus would force Congress to cut spending by the amount it currently takes from the surplus — about $85 billion a year, or roughly 3 percent of the total $2.5 trillion federal budget."
Taking the Social Security surplus and using it to create personal accounts does not force Congress to cut spending by one dime. The Republicans in Congress have rescinded the PAYGO rules, which would have required any new spending to be paid for. There is no other law or rule that requires that any new spending be matched either by tax hikes or spending cuts. So adding a trillion dollars' worth of new spending over the next ten years would not in any way require corresponding cuts in other government spending.
At present, the only thing that could force Congress to cut spending is their sense of fiscal responsibility. If members of Congress were unwilling to charge their spending to the national credit card, passing the costs on to the next generation with interest, then they would find some way to make up the costs of this new program. But if they had a sense of fiscal responsibility, they would not have to pass any ill-advised new programs in order to "force" themselves not to spend the Social Security surplus. They would exercise restraint all by themselves.
The same argument shows why Grover Norquist's idea of 'starving the beast' is misguided. Norquist thinks that we should cut taxes, since once we deprive the government of revenue, members of Congress will have no choice but to cut spending. It's one thing to say this when your party is in the minority, and therefore just can't pass the spending cuts it wants. It's another thing entirely when your party controls all three branches of government, and is therefore in a position to just cut government spending directly. When you hold power, you do not need to be forced.
This matters because if one wants to reduce the size of government, cutting spending is a much better way to do it than cutting taxes in the hopes that eventually you will be "forced" to cut spending. What does the "forcing", here, is the thought that our national debt has gotten large enough that we risk very serious economic problems. "Starving the beast" means taking our country to the brink of those problems in the hope that we will be sufficiently scared once we get there to cut government spending. It's like trying to lose weight by giving up on exercise, hoping that once you are no longer able to eat much of anything without gaining weight, your weight will shoot upwards, you'll develop serious health problems, and then you'll finally develop enough motivation to go on a diet. That's a stupid thing to do to yourself, and an even more stupid thing to do to your country. And if a Congressional Representative's only excuse for doing it is that s/he doesn't have the willpower to cut spending directly, then maybe s/he should resign in favor of someone who does.