No touching social security

My attention was drawn to a strange press report by Al Arab Al Yawm newspaper, published on November 25, 2014, that said: “The Budget Department at the Ministry of Finance is considering the amalgamation of the Social Security Corporation (SSC) in the general budget of the government. The SSC disburses around JD650 million a year as administrative expenses and pensions to retirees.”

This piece of news referred to the SSC expenditure, but one can only think what was meant must have been SSC revenues, which currently stand at around JD1.3 billion a year, almost double the outlays.

Having the revenues and expenditures of the SSC absorbed by the central government’s budget would cover the deficit in the budget, a very desirable outcome, but we are talking now about using the long-term savings of employees and workers to enable the current expenditure of the government.

Inclusion of the social security revenues in the general budget is practised in many countries, including the US, where employees’ monthly contributions are seen as taxes and treated as part of the federal budget’s revenue.

The end result was that social security in America went bankrupt and became a burden on the budget.

Social security in the US is not an independent entity, as in the case of Jordan. It is reduced to certain accounts in the treasury books of account.

What we in Jordan have at this time is a central budget with a large deficit. The minister of finance is searching for additional funds, either from foreign grants, loans or higher taxes. 

At the same time, we have a public corporation that sits on billions of dinars and enjoys an annual cash surplus of no less than JD650 million, so it is only natural for those responsible for the budget to be tempted. 

They may look at the rich corporation and see in it a spoil that can be snatched.

If a marriage of convenience between the government and the SSC budget would take place, things would not be confined to annual cash surpluses, but extended to SSC deposits with banks and other assets, which would reduce public debt from a statistical point of view.

So far, government attempts were confined to borrowing from SSC at the going rate and, from time to time, pushing SSC to enter into investments and projects desired by the government for economic reasons but not appropriate for the SSC from a financial point of view, but it never contemplated swallowing the SSC altogether.

I doubt that this wild idea will be allowed to become reality.

I, rather, would like to believe that this whole strange story was built on some kind of misunderstanding by the reporter, or that it could be a test balloon or just some sort of brain storming at the level of the budget department’s staff, but not contemplated by the Ministry of Finance.

The government spokesman would be well advised to categorically deny the story.