ISNT THAT SPECIAL! Treating SS as he treats no one else, a Big Scribe misled C-SPAN viewers:
WEDNESDAY, DECEMBER 15, 2004
ISNT THAT SPECIAL: Social Security is going belly-up! Theres nothing in the trust fund but worthless IOUs! The program wont be there when Gen X retires! Slick proponents of privatization have spent decades crafting these misleading spins—messages which convince the public that SS has to be overhauled. These messages are routinely recited—and to many people, they will seem quite convincing. To consider another common construction, lets review Martin Crutsingers comments on yesterday mornings Washington Journal. For the record, Crutsinger isnt the Average Schmoe. He is, in fact, chief economics reporter for the Associated Press.
The exchange that incomparably caught our ear begins about sixteen minutes in. A caller from Keyport, New Jersey posed a semi-murky question:
CALLER (12/14/04): Good morning. I have a question on Social Security. I thought—I thought years ago, when Social Security taxes were raised, part of the money was supposed to be set aside to pay for future benefits. So would the presidents private accounts really have as big an impact as youre suggesting? I thought Social Security was no longer pay-as-you-go.The caller referred to the 1983 hike in payroll taxes, long described as an attempt to pre-pay the costs of baby boomers retirement. But it was Crutsingers answer that caught our attention. The scribe offered another of the alarming-but-illogical images that have long ruled the SS debate. Its important to look at one part of what he said. Youre going to hear it said often:
CRUTSINGER (continuing directly): No, unfortunately, it is pay-as-you-go. The money is being set aside in a trust fund which is growing, but unfortunately the government is taking the $100 billion surplus or so every year and spending the money so that it lowers the overall deficit, and it is putting an IOU, essentially, in the Social Security trust fund. But when the Day of Reckoning comes—and thats around 2018, when the amount of money being collected in payroll taxes will not be enough to cover all of the benefits—theyre going to have to go to the trust fund and guess what? Theres no money there. So what theyll do at that time is that theyll either cut benefits, raise taxes or borrow more to pay for the benefits that are there. So theyll have to come up with real money by 2018 because thats when there will start to be a gap in the amount being paid in every year and the amount that theyre paying out every year.Sounds bad! Indeed, it sounds a bit like Doomsday! According to Crutsinger, the Day of Reckoning comes in 2018. At that time, the government will have to cut benefits, raise taxes or borrow more money if it wants to pay back SS.
As always, lets start with basic points of agreement. According to current projections, 2018 is roughly the point at which payroll taxes will fall short of the amount needed to pay SS benefits. And that will be the year when the SS trustees will have to turn to that trust fund. But everything Crutsinger says after that is based on false logic and scary imagery. He applies standards to the repayment of loans from SS that he applies nowhere else.
In 2018, will Congress have to cut benefits, raise taxes, or borrow more to pay back its loans from SS? It will almost surely borrow more money that year. But guess what? Thats what Congress does all the time when it pays back money it has borrowed! This year, for example, the federal government is paying back many past loans—and yes, its borrowing lots more money as it does so. This is a wholly normal practice—and it never enters any discussion until the question of SS comes up. Then we act like this is a frightening matter—and a reason to revamp SS.
How does government borrowing work? As Crutsinger notes, Congress is currently borrowing about $100 billion per year from the SS trustees. But that isnt the only money it borrows; this year, for example, Congress will borrow about $400 billion beyond that, from a wide assortment of individuals and entities. And guess what? All that $400 billion will be paid back—but no one presents scary images about raising taxes or borrowing more when we talk about repaying that money. That $400 billion will be repaid—and there is absolutely no reason why the $100 billion from SS cant be repaid too. And no, there will be no need to cut benefits to pay back SS. Congress can simply pay back the SS trustees the same way it pays everyone else.
As weve told you in the past: Congress borrows from many individuals and entities. All those loans do get paid back. Its only in the case of SS that frightening images are suddenly offered—images that could be applied just as well every time Congress pays back any loan. Crutsinger seems like a decent fellow; were sure he doesnt intend to mislead. But when he appeared on yesterdays show, he presented one of the scary images that have been generated in the propaganda shops where partisans work to pimp privatization. These images are frightening, and they may seem convincing. But the images were designed to mislead, and Crutsingers presentation, though made in good faith, did serve that purpose quite capably.
The Congress will borrow a whole lot of money this year. Only one-fifth of it comes from SS. The other money will be paid back, and no one will traffic in scary images about raising taxes or borrowing more. Only when we discuss SS do we hear these scripted Fright Tales. Isnt that special? Treating SS as he treats no one else, Crutsinger told a scary story—a story designed in a slick spin-shop because of its power to mislead you.
THOSE WORTHLESS IOUS: Pundits love to wring their hands about those worthless IOUs in the trust fund. But please note—an IOU is all anyone gets when he loans money to the government! When Ross Perot buys government bonds, he expects that hell be repaid on schedule. But all he has is the governments promise—a promise that becomes a worthless IOU when we start talking about SS. Everyone who loans money to the government receives a promise to be repaid. And no one calls this a worthless IOU—until we start using the slick-slippery spins cooked up to bring down this key system.
MUST-READ NYT: In yesterdays Times, Edmund Andrews discussed the obvious; any program Bush proposes will involve deep cuts in guaranteed benefits. This report included a lot of top info. But reporters need to be very clear when they discuss these spin-laden topics, and there were parts of this piece that we didnt quite get. Well look at this article tomorrow.
YOUR LIBERAL PRESS CORPS IN ACTION: After Rumsfeld made those repellent remarks in Iraq, conservative hacks tried changing the subject. They tried to pretend that journalist Edward Lee Pitts had misbehaved in helping see that the question got asked. How absurd was this nit-picking claim? On Fox News Sunday, Brit Hume was having none of it:
CHRIS WALLACE (12/12/04): Brit, a journalistic felony or just a misdemeanor?To which we say, good for Brit Hume! But fiery liberal Juan Williams was there too. Try to believe that the hapless man said it:
WILLIAMS (continuing directly): I would say he should have told his readers. He should have said in the story, you know, "I helped to arrange for this question to be asked." I mean, that's a matter of journalistic ethics, I suppose. And you could imagine that Secretary Rumsfeld thinks that he got sandbagged a little bit by this, because he thinks maybe it wasn't a genuine question coming from the soldiers.Poor Rummy must feel sand-bagged, Juan said. How inane is your celebrity press corps? Williams, of course, is on this show to provide liberal fairness-and-balance.