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6 August 2001

Our current howler (part IV): Is you is or is you ain’t my trust fund?

Synopsis: The SS debate involves real questions. We should fight to avoid getting sidetracked.

About That Trust Fund
Olivia Mitchell and Thomas Saving, The Washington Post, 7/31/01

Social Security: Let’s End the Political Football
John Breaux and Judd Gregg, The Washington Post, 7/26/01

Letter to the editor
John Wilkerson, The Washington Post, 7/16/01

Social Security: Covering What We Owe
Editorial, The Washington Post, 7/24/01


The Medicare debate was wholly "semantic"—a battle over which words to use in describing a transparent set of facts (see THE DAILY HOWLER, 8/3/01). The looming debate over Social Security isn’t so narrowly verbal. Indeed, some major players are making statements which are simply false. Consider a recent WashPost piece by two members of the president’s commission. The SS trust fund is now over $1 trillion, they write; by 2016, "the trust fund balance will top $5 trillion." "Why, then," the writers ask, "does the commission argue that the system needs fixing?"

MITCHELL AND SAVING: Why, then, does the commission argue that the system needs fixing? Because the economics of the problem are more complex than simple accounting indicates…[T]he only way for the government to redeem trust fund IOUs is to raise taxes, cut spending or borrow.

But it ain’t necessarily so. Suppose, for example, that the economy grows at better rates than expected, and begins throwing off general revenue surpluses. In that case, those surpluses could be used "to redeem [Social Security’s] trust fund IOUs," and it wouldn’t be necessary to raise existing taxes, cut existing spending, or borrow money. Ironically, of course, the economy was projected to start producing such surpluses before the recent Bush tax cuts. Lacking irony, the Bush administration killed the prospect of future surpluses with the cuts, then began complaining that we’ll have no dough when SS costs begin to rise in the future.

But most mainstream commentators on SS have worked with conventional forecasts. They assume that payroll taxes will fail to meet the cost of SS benefits starting in 2016. If that is true, we need to find some way, starting that year, to supplement the payroll tax if we want to maintain the current level of benefits.

And that is where the discussion has begun to echo the Medicare mess. Inordinate amounts of time have been spent on a plainly semantic dispute. This debate involves the program’s "trust fund," which either does or doesn’t exist, and whose assets either are or aren’t "real." Alas! In the mid-90s, we spent several years like this, arguing whether the GOP Medicare plan was or wasn’t a "cut" in the program. Our capacity for wasting time on semantic disputes is established, and need not be re-proven.

Was the GOP Medicare plan a "cut?" The basic facts were all in plain view, and combatants argued, for several years, about which words to use in describing them. Similarly, all the basic facts about the SS trust fund are known to all the combatants. Everyone knows that payroll taxes have exceeded SS’s annual needs for two decades. Everyone knows that these surpluses have been used to purchase interest-bearing Treasury bonds (which now total the $1 trillion to which the commissioners referred). Everyone knows those bonds are backed by the "full faith and credit of the United States government." And everyone knows that when the SS program begins redeeming those bonds, the money used to redeem the bonds will come from the federal government’s assets, and will therefore not be available for use in other programs.

Everyone knows these basic facts, but semantic disputes about them are raging. Some have said the trust fund’s assets are "real," and some have said that they’re "just IOUs." But all these people know all the same facts. Once again, the combatants are arguing about what words to use in describing them.

Happily, a number of people have noticed the strangeness of the debate, and have begun to complain about it. In an op-ed piece in the Washington Post, Senators Breaux and Gregg were bemused:

BREAUX AND GREGG: The American people deserve more. We have treated them to mind-boggling debates over surpluses, general revenues and lockboxes. Over the past few weeks we proved that we cannot agree on whether real assets even exist in the Social Security trust fund.

A letter-writer was simply puzzled:

WILKERSON: Alicia H. Munnell and R. Kent Weaver [op-ed, July 9] said, "proponents of Social Security privatization…claim that the assets contained in the Social Security trust fund are not ‘real’ but merely IOUs from the government. This assertion is wrong."

It seems incredible that the status of billions of dollars can be argued about in public for years without resolution.

The Post itself, in an editorial, expressed exasperation:

THE WASHINGTON POST: [The] dispute unfortunately leads to the question of whether the reserves in the trust fund—IOUs from one part of the government to another—should be regarded as "real" or merely bookkeeping entries. It’s not a useful argument, in that whichever answer you adopt, the government has the same problem—find more money or cut costs.

Again, we note that the Post’s last statement ain’t necessarily so. If the government is running general revenue surpluses in 2016, it will not be necessary at that time to "find more money" or "cut costs" to "redeem trust fund IOUs." When discussing a matter as important as this one, it’s probably best to buck recent trends and make only accurate statements.

We should try to avoid semantic disputes in the discussion about SS. Proponents should put facts on the table. At THE HOWLER, we think the burden rests with those who want to change the program. Instead of arguing about what is "real," they should describe the federal budget in 2016 (or 2030) in the absence of SS reform. If we start redeeming those IOUs, what will that keep the government from doing? Will it keep us from funding essential programs? Using the shaky numbers that twenty-year forecasts allow, let them describe the federal government in the absence of their proposed changes. And let them show what the budget will look like with the actual changes they propose.

But those who favor the status quo have the very same burden. If we do nothing about SS, what will our future budgets look like? It isn’t enough just to insist that the trust fund’s assets are "real." What will happen when we "really" redeem them? Will we "really" have to raise taxes to do so? If not, will there be enough general revenues to maintain the rest of the budget?

We totally wasted the mid-1990s arguing about a single word: "cut." Those who want to play leadership roles need to do better with this one.

Promises, promises: Some will say that the government has an obligation to maintain existing benefit levels; when officials spoke of a "trust fund" for the past twenty years, they were promising taxpayers that the money would be there for their retirement. That is a perfectly valid point. But in these slightly murkier, political realms, everyone knows a few more things. First, there surely has been a tacit promise that payroll tax "overpayments" would be used to maintain SS benefits when boomers retire. That’s what the "trust fund" metaphor was all about. But second, everyone knows that this tacit promise will be dumped if honoring it ruins the rest of the budget—or if some political movement simply wants to dump it, and finds a way to do so. Future benefit levels will be changed if maintaining them mangles the rest of the budget. So it’s time for combatants to serve some brass tacks; it’s time to say what future budgets will look like under the regimes our combatants are proposing.

 

The occasional update (8/6/01)

Where do bad facts come from: Friday night, Lisa DePaulo appeared on The Edge to discuss her upcoming Talk magazine piece. At one point, Zahn played very old tape of a Condit girl friend, stewardess Anne Marie Smith:

SMITH: He called me approximately May 5th or 6th saying, "I’m going to have to disappear for a while. Don’t call me. Call me and leave me a brief message. Keep it very brief, in three to four days." And, you know, I was very concerned and I, he’s like, "It’s nothing between you and me. Everything between you and I is fine.’"

Zahn asked DePaulo what it all meant. To DePaulo, "it means at the very least that there’s sort of a callousness to this man who shortly after being called by these hysterical parents, his first concern is calling his other girlfriend and, you know, worrying about what this means for him." In this comment, DePaulo referred to a fact which had been established earlier in the program. The Levys first called Condit on May 5 and 6; "at the very least," DePaulo said, the callous congressman turned right around and tried to make nice with Smith.

But DePaulo was being disingenuous. The previous night, Smith had appeared by phone on Larry King Live, and she had made it clear that the phone call in question actually occurred on May 10 or 11. She was specifically challenged on those dates by guest host Roger Cossack; when challenged, she specifically confirmed them. (In fact, she said the call occurred on a Friday afternoon. That would have been May 11.) And DePaulo was sitting right there on the Larry King panel; she was right there when the dates were established.

Those who have followed this cable spectacular will understand these dates’ significance. Smith first showed up in early July, using the erroneous "May 5 or 6" when she described this phone call. These dates were immediately used to suggest that Condit must have murdered Chandra; why else would he have been making comments like this at so early a date, pundits asked. Many pundits said the date suggested that Condit knew about Levy’s disappearance even before her parents informed him; this was a routine assertion. The change in date is therefore significant, and that’s probably why Cossack asked Smith to confirm it. But for the record, Smith’s team had used the May 10/11 date long before last Thursday night. In fact, her lawyer, Jim Robinson, had first used those dates on—you guessed it—The Edge, all the way back on July 18. Here’s what Robinson said that night when asked about the phone call:

ROBINSON (7/18): That’s exactly true. On May 10th or 11th, I cannot remember which day it was, whichever was Friday, he called her and said that he was thinking about going into hiding, that people were after him. He wouldn’t elaborate. And that was basically it.

That was the first time that Smith or Robinson used the May 10/11 date. Quite typically, Zahn didn’t notice the switch in dates, and didn’t ask Robinson to confirm what he said. Neither did tough-talking Condit-accuser Cynthia Alksne, who was engaged in her usual loudmouth posturing on Zahn’s panel that night.

So where do bad facts come from? Let’s review. Robinson said the phone call occurred on May 10/11 all the way back on July 18. Last Thursday night, Smith herself said May 10/11, and confirmed the dates when asked. Each said Friday, which was in fact May 11. But the following night, DePaulo told a better tale, one she apparently likes. When the hapless Zahn played vintage tape of Smith giving out the inaccurate dates, DePaulo happily played along, condemning Condit for making the call on a date which she knew was invalid. By the way, had DePaulo simply failed to notice what Smith said on Thursday night? Sorry. DePaulo also appeared on Friday’s The Point with Greta Van Susteren, a show whose host is quite alert. Van Susteren specifically noted that Smith had changed the date of the call, and DePaulo agreed with her statement.

Two points about this latest "bad fact" eruption. First, Zahn topped even herself Friday night, twice playing tape of old statements which have long since been retracted as false. She not only played the vintage tape of Smith, she again played tape of the Levys falsely saying that Chandra’s last phone calls came from Condit (see THE DAILY HOWLER, 8/3/01). Is Zahn incompetent, or simply dishonest? Here at THE HOWLER, we have no way of knowing. But say hello to your tabloid TV corps. No one else, in any sector, is allowed to perform in so hapless a manner. Zahn’s misused viewers are fed bad facts every time they watch her program.

Our final comment concerns DePaulo. Here she was, on Friday’s The Edge, deeply troubled by Condit’s dishonesty:

DEPAULO (8/3): You know, I’ve said all along that if we are still on Gary Condit, it is Gary Condit’s fault. If he had been honest about this from the very, very beginning, that he was involved with her, they may have eliminated him on May 15th. Instead, we’re heading into, you know, the third month now.

DePaulo is always troubled by dishonesty—except when it jacks up her story. At THE HOWLER, we have no idea what happened to Levy. But we’ve had a good chance to observe DePaulo, and we think you should keep her habits in mind as you evaluate her new piece in Talk.

Commentary by Anne Marie Smith (taped), Lisa DePaulo
The Edge, Fox News Channel, 8/3/01

Commentary by Jim Robinson
The Edge, Fox News Channel, 7/18/01