One of the press's longest campaigns to systematically obfuscate the truth about a specific government program is the one that has protected Social Security from reasonable scrutiny for most of the 75 years of its existence.
The Associated Press's Stephen Ohlemacher did his part to continue the misdirection in his coverage of the possible effects of the payroll tax cut President Obama and congressional Republicans have proposed.
To Mr. Ohlemacher, the Social Security system has this huge, "guaranteed" trust fund. I can almost stop there, but readers should buck up and see the following excerpt as an object example of the falsehoods fed to the public for so many years (bolds and numbered tags are mine):
Payroll tax cut worries Social Security advocates
President Barack Obama's plan to cut payroll taxes for a year would provide big savings for many workers, but makes Social Security advocates nervous that it could jeopardize the retirement program's finances. [1]
The plan is part of a package of tax cuts and extended unemployment benefits that Obama negotiated with Senate Republican leaders. It would cut workers' share of Social Security taxes by nearly one-third for 2011. Workers making $50,000 in wages would get a $1,000 tax cut; those making $100,000 would get a $2,000 tax cut.
The government would borrow about $112 billion to make Social Security whole. Advocates and some lawmakers worry that relying on borrowed money to fund Social Security could eventually force it to compete with other federal programs for scarce dollars, leading to cuts. [2]
Social Security taxes "ought to be held sacrosanct," said Rep. Earl Pomeroy, D-N.D., [3] chairman of the House Ways and Means subcommittee on Social Security.
"When you start to signal that the (Social Security) tax levels are negotiable, you end up in long-term trouble, I think, in terms of making absolutely certain that the entitlement funding streams are secure," Pomeroy said. [3]
... The proposal requires the Treasury Department to replenish Social Security with other government funds, which would have to be borrowed. [4]
"The payroll tax cut has absolutely no effect on the solvency of Social Security," [4] said White House economic adviser Jason Furman.
Social Security has accumulated a $2.5 trillion trust fund since the 1980s. But the government has borrowed that money to pay for other programs. The Treasury Department has issued special bonds to Social Security, guaranteeing the money will be repaid, with interest. [5]
As aging baby boomers start to retire and strain the system, advocates worry about future benefit cuts. This year, for the first time since the 1980s, Social Security will pay out more in benefits than it collects in payroll taxes. Without changes, Social Security's trust funds will run out of money by 2037, according to the trustees who oversee the program. [6]
Notes:
- [1] -- Actually, starting to effectively pay benefits out of "general revenues" has been a long-term goal of the left. Decoupling tax collections from benefits paid would ensure that the program turns into just another welfare program whose benefit levels are determined by public noise, not financial realities.
- [2] -- Sadly, Social Security benefits have a better chance of being preserved at unrealistic levels if it is "competing with other programs" for money instead of being limited by the public's and employers' willingness to tolerate directly related payroll tax increases.
- [3] -- Mr. Pomeroy demonstrates why he won't be missed after he leaves Congress in defeat a few weeks from now. Pomeroy's MC Hammer imitation ("U Can't Touch This"), also imitated by many other departing congresspersons, is why the system is in terrible shape to the tune of a $7 trillion-plus actuarial liability.
- [4] -- Memo to Mr. Furman, who I believe really knows better: Treasury's "replenishment" of Social Security by definition negatively affects the solvency of the federal government. Therefore, the payroll tax cut has an effect on the solvency of Social Security. This is not arguable.
- [5] -- The government "guarantee" that "the money will be repaid, with interest" means nothing if the government doesn't have the ability to repay. There is growing doubt that the government will be able to meet its obligations. Since when can Stephen Ohlemacher or anyone else pretend to know whether a government that is already almost $14 trillion in debt -- and which is increasing the level of debt at a rate of well over $1 trillion per year -- will be able to pay up when it has to?
- [6] -- Hey Steve, you just got done saying in item [5] in the excerpt that money that should be in the "Trust Fund" has been borrowed. Uh, that means the "Trust Fund" has no money -- right freaking now, in 2010. We don't have to wait until 2037 for that to happen; we're already there. As you acknowledge, the program is paying out more in benefits and administrative costs than it is collecting in taxes. The only reason full benefits are being paid is that the government is willing to pay money it doesn't have to partially sustain them. This problem will only get worse in the next 27 years as the Social Security system attempts to collect on its "guaranteed" bonds.
Fabrications and falsehoods such as those purveyed by Ohlemacher have been part and parcel of reporting on Social Security for as long as the program has existed. Those who know the truth must continue to challenge the misinformation until the public understands what a mess "progressives" have made of things.
Cross-posted at BizzyBlog.com.
