Climate Change Bill Could Hurt Social Security
By Lori Montgomery
Updated, 5:35 p.m. ET: House Democrats say they have corrected the bill by requiring the Treasury to replace any lost cash -- a daunting task in the face of projected budget deficits.
With the House headed toward a Friday vote on climate change legislation, there's fresh evidence that it would have negative economic effects -- and deal a blow to the solvency of Social Security.
In a letter to the leaders of the House Ways and Means Committee, Stephen C. Goss, the chief actuary of the Social Security Administration, estimates that the House plan to dramatically reduce greenhouse gas emissions by forcing polluters to purchase allowances to emit carbon would increase inflation and reduce total economic output, starting in 2012.
"In the simplest terms, we conclude . . . that constraints on the market to yield the reductions in emissions required by the bill will change the business practices of energy producers in ways that will make energy production more costly, and that this will result in higher prices in general and a slightly reduced level of output from domestic industry,"
Goss wrote. These "costs thus represent the price of reducing carbon emissions by over 90 percent from the level that might otherwise have occurred by 2050."
Those effects are highly uncertain, Goss wrote. But they are likely to reduce tax revenue and increase inflation by as much as 3 percent by 2050, forcing the government to pay out more money faster to the millions of retirees and other Americans who receive Social Security payments, costing the fund nearly $17 billion over the next decade.
"Under this illustrative scenario," the letter says, "the (Social Security) Trust Fund would become exhausted a few months earlier, late in 2036 rather than early in 2037."
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