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9 September 1999

Our current howler (part I): Lockbox bollix

Synopsis: A caller wanted the lockbox explained. Jeff Birnbaum fell down on his basics.

Commentary by Jeffrey Birnbaum
Washington Journal, C-SPAN, 8/29/99

Lott to keep pushing ‘lockbox’
Audrey Hudson and John Godfrey, The Washington Times, 5/27/99

Safest retirement lockbox
Scott Hodge, The Washington Times, 6/7/99

Will newfound money help bridge the partisan divide?
William Welch and Susan Page, USA Today, 6/29/99

Fear of Fiduciary Prudence Grips D.C.
David Shribman, Fortune, 8/2/99


The caller from Cody wanted straight dope about the confusing "lockbox" idea. So he placed a call to Washington Journal, to speak with Fortune magazine's Jeffrey Birnbaum. Birnbaum is one of the talking heads who enlighten us on Special Report with Brit Hume (Fox News Channel). And the call concerned one of the most basic topics in the summer's entire news mix:

CALLER: I hope this isn't too stale. I'm going to refer to a brief article by David Shribman in the August 2 issue [of Fortune] where he dealt with the matter of paying off the U.S. debt.

Our analysts leaned forward expectantly. And their interest picked up when the caller began discussing that tricky "lockbox:"

CALLER: I've been trying to get a straight answer on this Social Security lockbox concept and have not been successful with politicians. I thought maybe a journalist could deal with this.

Uh oh! It was already clear that the sanguine caller isn't reading his DAILY HOWLER! Already doomed, he plowed ahead with his question about that darn 'box:

CALLER: The politicians I've inquired about this say, well, the lockbox they show us in the publicity stunt is not what is really intended. What they really mean is they're going to use the Social Security surplus to pay off the national debt.

At this point, Birnbaum shook his head "No." The caller pressed on with his problem:

CALLER: Well, Mr. Shribman quotes Rob Portman, a Republican from Ohio, in his article as saying that if the Social Security trust fund surpluses are used to reduce the debt, then the surpluses are not going to be there when the baby boomers retire and the big Social Security obligations are due. So that would suggest to me we're being scammed somewhere...

The caller had offered a good account of conceptual problems surrounding the "lockbox." Use of an actual bank safe as a prop on TV has almost surely confused many people—has made them think that surpluses will be locked in some kind of a vault, to be used when baby boomers start retiring. The facts, of course, are totally different, as politicians had told C-SPAN's caller. In late May, the House voted overwhelmingly, across party lines, to affirm the overall lockbox concept. Here's how the Washington Times explained the idea the following day:

HUDSON AND GODFREY: The lockbox proposal would require the federal government to use budget surpluses generated by Social Security to pay off federal debt. That, in turn, would prevent Congress from using the money on new programs or tax cuts.

The next week, Scott Hodge, senior fellow at Citizens for a Sound Economy, said this is a Times op-ed column:

HODGE: The Senate lockbox plan, designed by Spencer Abraham, Michigan Republican, and Pete Domenici, New Mexico Republican, is essentially a plan to buy down government debt using Social Security's $1.8 trillion in "off-budget" surpluses over the next 10 years. (The House-passed version effectively achieves the same ends albeit through procedural means.)

Late in June, President Clinton announced new budget projections, and outlined his own plans for the SS surpluses. Here's how USA Today explained it:

WELCH AND PAGE: Clinton has moved toward Republican demands for a "lockbox" to prevent the Social Security surplus from being raided for other purposes. Clinton now proposes to use the excess Social Security payroll taxes to pay down the $5.7 trillion national debt—essentially the same thing Republicans propose.

Indeed, under both White House and GOP congressional "lockbox" proposals, the SS surplus would be used to pay down the debt. Call up the House Republican Policy Committee, and they'll tell you that's what they want too.

Under current "lockbox" proposals, then, the SS surpluses over the next ten years will be used to pay down the debt. This will reduce the size of future federal interest payments, making it (somewhat) easier for future tax-payers to meet Social Security obligations. But the surplus moneys will not be locked up in a safe, waiting for boomers to start to retire. The surplus moneys are not "going to be there when the baby boomers retire" in the way that many people have believed.

We don't think the caller is being scammed—but it's hardly surprising if he is confused. The use of the "lockbox" created a false impression—that current budget plans would lock away surplus moneys for later use. Since citizens have also heard boasts about reducing the debt, it's only natural that many are puzzled. We're certain the caller isn't alone in his confusion about this basic matter.

In fact, we know the caller isn't alone, because we listened to Birnbaum's response. The caller hoped Birnbaum could explain the lockbox, but his reply was Grade A Potomac mud. Birnbaum had shaken his head "No" when the caller said that the surplus would be used "to pay off the national debt." Now he launched a discussion that could only have frustrated the Cody caller:

BIRNBAUM: What the lockbox concept intends is that the money that comes into the federal coffers from the Social Security tax, the payroll tax, all of that money would be set aside and would not be used for any of the operating budget of the federal government. All of that money would be allowed to accumulate...The important thing is, about this lockbox concept, is that with the billions and billions of dollars that is extra, coming into the Social Security trust fund, and the money that is beyond the needs of the Social Security program itself will be locked away, will not be touched, would not be used for any other part of the budget, and would be allowed to accumulate, so that when the baby boomers begin to retire in earnest, the extra money can be spent out slowly. That's the whole idea... [Our emphases]

But that is not what would be done with this money under the lockbox concept. What would actually be done is easy to say—the money would pay down the debt. Having shaken his head when the caller said this, Birnbaum proceeded to craft contradictory images, of money being put away, allowed to accumulate, and spent out at a future date. That is plainly not what will be done with this money. It is easy to say what will be done. Birnbaum said everything but.

Is it too much to ask that high profile journalists be able to explain basic concepts like this—be able to explain a basic proposal which has been all over the news for months? On Special Report, Birnbaum has no problem engaging in rank speculation, explaining the motives of assorted public figures. He's always ready to gossip about why people are buying houses in Westchester County. Is it too much to ask that, along with the guesswork, he be able to explain basic government policies? Is it too much to ask that scribes at his level be able to answer basic questions like the C-SPAN caller asked?

As our school kids return to their government schools, pundits insist they get back to the basics. We think our press corps should do the same thing. We'll suggest needed lessons all week.

 

Portman speaks: Here is the excerpt from the Shribman article to which the caller referred:

SHRIBMAN: "There are real problems with the no-problem analysis," warns Representative Rob Portman, an Ohio Republican on the House Ways and Means Committee. "If the Social Security trust fund surpluses are used to reduce the debt, then the surpluses are not going to be there when the baby-boomers retire and the big Social Security obligations are due."

This doesn't mean the caller is being "scammed." But Birnbaum, bollixed by basic facts, couldn't explain that either.

Tomorrow: Dick Armey spun the non-SS surplus on Meet the Press. Stone Phillips showed no sign of knowing.