Social Security Con Game

Look at how easy it is to con everybody.

Bill Halter, who served as Social Security commissioner during Bill Clinton's presidency, met with the Daily Idiot Editorial Board in Iowa City and spoke at the university. The DI clearly had their kneepads on. This is from the DI Editorial Board this morning:

No one can deny the need for reform, either: By 2041 (or 2052, according to the Congressional Budget Office), the Social Security system will no longer be able to pay all its benefits.

"Reporter" Elaine Fabian repeats the same fallacy in her article concerning Halter's visit:

A recent nationwide survey conducted by Harvard University found that 70 percent of college students are concerned that Social Security will no longer provide benefits by the time they retire. Bush has said the program's funds will be exhausted by 2041. The Congressional Budget Office disagrees, saying that beginning in 2052, the program's funds will only cover 82 percent of benefits.

Wake up, "reporters" - the below is from the 2005 Social Security Trustees report that came out last month:

The year-by-year relationship between income and cost rates shown in figure II.D2 illustrates the expected pattern of cash flow for the OASDI program over the full 75-year period. Under the intermediate assumptions, the OASDI cost rate is projected to decline slightly during 2005 through 2007 and then increase up to the current level within the next 3 years. It then begins to increase rapidly and first exceeds the income rate in 2017, producing cash-flow deficits thereafter. Despite these cash-flow deficits, beginning in 2017, redemption of trust fund assets will allow continuation of full benefit payments on a timely basis until 2041, when the trust funds will become exhausted. This redemption process will require a flow of cash from the General Fund of the Treasury. Pressures on the Federal Budget will thus emerge well before 2041. Even if a trust fund's assets are exhausted, however, tax income will continue to flow into the fund. Present tax rates would be sufficient to pay 74 percent of scheduled benefits after trust fund exhaustion in 2041 and 68 percent of scheduled benefits in 2079.

What is that trust fund? Is that money that's just sitting somewhere in a lockbox? Not really. Ever since LBJ allowed Social Security to be put "on budget" in the 1960s to mask the true cost of the Vietnam War, Congress has been raiding money from it. Congress spends that extra money and turns those numbers into Treasury bonds and they get added to the National Debt. So.... in order to unlock the "trust fund" money, we have to come up with three or four trillion dollars between 2017 and 2041 to pay off the bonds that are worth, oh, about three or four trillion dollars.

So is the "trust fund" money really an asset? Maybe if you're a highly compensated corporate accountant or executive at Enron or Worldcom who isn't thinking about spending time in a Federal pound-me-in-the-ass prison. Yeah, you might believe such baloney. And maybe if you're some "reporter" or "editor" in the "journalism" department at the University of Iowa who doesn't know jack about Econ 101 and hates anything that Bush proposes. Yeah, you might believe it.

But that doesn't make it right.