Times for the Truth on Social Security
If the people only knew what the Bush administration was peddling, why surely they would reject it outright as evil. So says The New York Times in a Monday editorial.
The Times grasps at many straws in coming to such a conclusion. The thrust of the message is that there is no problem with Social Security, and if there is no problem with Social Security, the Republicans must be eager to "fix" it only so that they can destroy this 70-year-old institution.
No problem with Social Security? Here's the argument:
The Times tries to distract the attention of the reader by slinging mud. How dare the President imply the U.S. will be unable to meet its debts! Of course, President Bush has done nothing of the kind. U.S. Treasury securities are certainly not worthless. When they are redeemed, the Social Security system will indeed collect their due. But from where do those funds come? Snide remarks from the Times aside, the truth is that we, the American taxpayers, would have been much better off had Congress thought to team up with Sealy and put the Social Security surpluses into as many mattresses as possible.
Instead that money was given to the government, and the Social Security "trust fund" got T-bills. What did the government do with that money? Well, it spent it. Sooner or later, the trust fund is going to need its funds back. When the SSA comes knocking, Uncle Sam's wallet will be in his other pants, and you'll be the guy beside him. "Man, I don't have that kind of money on me... say, could you help me out?"
Let's dumb this down to help out Times readers. Let's say the Federal government collects $100 per year in revenues. And Social Security runs a surplus of $10. Social Security says I don't need this ten-spot now, but I want it back later. The Feds say thank you very much, and spends it. So Federal spending is $110. Now the next year, let's say SSA breaks even. Is Federal spending cut? Of course not. They've gotten used to spending that ten bucks and it's now somebody's entitlement. So the Feds are short and you cough up the difference. The next year, SSA is short ten bucks and comes to the Feds to collect on its IOU. Now it's collecting the same $100 in revenues and has $120 in expenses. This is the 2018 Social Security "problem", to be Reuterian, that the Times fails to acknowledge.
Whether private investment accounts are the answer to problem remains to be seen. The proposal should be vigorously debated in the many public forums available to both sides. But to deny that there is a serious problem is an injustice to literally every American, since every one of us has or will have a stake in this system. But what the left cares most about is thwarting the tyrant Bush, and will reject solutions and deny problems out of hand if such a campaign will land the Democrats back in power in 2008, at which point they can raise taxes on the "rich" to solve not just this, but every other imaginable crisis.
...the administration is manipulating information - a tacit, yet devastating, acknowledgement, we believe, that an informed public would reject privatizing Social Security.
The Times grasps at many straws in coming to such a conclusion. The thrust of the message is that there is no problem with Social Security, and if there is no problem with Social Security, the Republicans must be eager to "fix" it only so that they can destroy this 70-year-old institution.
No problem with Social Security? Here's the argument:
At a recent press conference, Mr. Bush exaggerated the timing of the system's shortfall by saying that Social Security would cross the "line into red" in 2018. According to Congress's budget agency, the system comes up short in 2052; according to the system's trustees, the date is 2042. The year 2018 is when the system's trustees expect they will have to begin dipping into the Social Security trust fund to pay full benefits. If you had a trust fund to pay your bills when your income fell short, would you consider yourself insolvent?
In suggesting that 2018 is doomsyear, the president is reinforcing a false impression that the trust fund is a worthless pile of I.O.U.'s - as detractors of Social Security so often claim. The facts are different: since 1983, payroll taxes have exceeded benefits, with the excess tax revenue invested in interest-bearing Treasury securities. (An alternative would be to, say, put the money in a mattress.) That accumulating interest and the securities themselves make up the Social Security trust fund. If the trust fund's Treasury securities are worthless, someone better tell investors throughout the world, who currently hold $4.3 trillion in Treasury debt that carries the exact same government obligation to pay as the trust fund securities. The president is irresponsible to even imply that the United States might not honor its debt obligations.
The Times tries to distract the attention of the reader by slinging mud. How dare the President imply the U.S. will be unable to meet its debts! Of course, President Bush has done nothing of the kind. U.S. Treasury securities are certainly not worthless. When they are redeemed, the Social Security system will indeed collect their due. But from where do those funds come? Snide remarks from the Times aside, the truth is that we, the American taxpayers, would have been much better off had Congress thought to team up with Sealy and put the Social Security surpluses into as many mattresses as possible.
Instead that money was given to the government, and the Social Security "trust fund" got T-bills. What did the government do with that money? Well, it spent it. Sooner or later, the trust fund is going to need its funds back. When the SSA comes knocking, Uncle Sam's wallet will be in his other pants, and you'll be the guy beside him. "Man, I don't have that kind of money on me... say, could you help me out?"
Let's dumb this down to help out Times readers. Let's say the Federal government collects $100 per year in revenues. And Social Security runs a surplus of $10. Social Security says I don't need this ten-spot now, but I want it back later. The Feds say thank you very much, and spends it. So Federal spending is $110. Now the next year, let's say SSA breaks even. Is Federal spending cut? Of course not. They've gotten used to spending that ten bucks and it's now somebody's entitlement. So the Feds are short and you cough up the difference. The next year, SSA is short ten bucks and comes to the Feds to collect on its IOU. Now it's collecting the same $100 in revenues and has $120 in expenses. This is the 2018 Social Security "problem", to be Reuterian, that the Times fails to acknowledge.
Whether private investment accounts are the answer to problem remains to be seen. The proposal should be vigorously debated in the many public forums available to both sides. But to deny that there is a serious problem is an injustice to literally every American, since every one of us has or will have a stake in this system. But what the left cares most about is thwarting the tyrant Bush, and will reject solutions and deny problems out of hand if such a campaign will land the Democrats back in power in 2008, at which point they can raise taxes on the "rich" to solve not just this, but every other imaginable crisis.
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