The Associated Press, aka the Administration’s Press, has been running a series of “Why It Matters” items in the run-up to the presidential election purporting to educate readers about important issues.
Reporter Stephen Ohlemacher’s contribution to the series concerning Social Security opens with a bald-faced fib, omits the fact that the system’s benefit payments and costs have exceed payroll tax collections for several years, and doubles down on the fib at the end. His opening sentence and other excerpts follow the jump:
WHY IT MATTERS: SOCIAL SECURITY
Unless Congress acts, the trust funds that support Social Security will run out of money in 2033, according to the trustees who oversee the retirement and disability program. At that point, Social Security would collect only enough tax revenue each year to pay about 75 percent of benefits. That benefit cut wouldn’t sit well with the millions of older Americans who rely on Social Security for most of their income.
Where they stand:
President Barack Obama hasn’t laid out a detailed plan for addressing Social Security. He’s called for bipartisan talks on strengthening the program but he didn’t embrace the plan produced by a bipartisan deficit reduction panel he created in 2010.
Republican challenger Mitt Romney proposes a gradual increase in the retirement age to account for growing life expectancy. For future generations, Romney would slow the growth of benefits “for those with higher incomes.”
… Social Security’s problems seem far off. After all, the program has enough money to pay full benefits for 20 more years. But the program’s financial problems get harder to fix with each passing year. The sooner Congress acts, the more subtle the changes can be because they can be phased in slowly.
For starters, not only has President Obama not “laid out a detailed plan,” he hasn’t laid out a plan at all. When asked to provide some details, Obama campaign adviser David Axelrod only “suggested the administration would reveal its plans when Congress was ready to talk about a “balanced” approach to reforming entitlements.” Richard Nixon was ridiculed for claiming to have a “secret plan” to end the war in Vietnam in the late 1960s. Now the AP’s Ohlemacher and the rest of the press is just waving through an unrevealed (i.e., secret) “plan” the president’s representative claims he has relating to the country’s core government-run retirement program.
Of course, Ohlemacher’s core fib is that the Social Security “Trust Fund” has trillions of dollars of “money” in it. Except for very small amounts of operating capital, all the “Trust Fund” has is a large stack of IOUs from the rest of the government. As the Office of Management and Budget said way back in 2000:
These [Trust Fund] balances are available to finance future benefit payments and other Trust Fund expenditures – but only in a bookkeeping sense…. They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures. The existence of large Trust Fund balances, therefore, does not, by itself, have any impact on the Government’s ability to pay benefits.
In other words, Stephen, the Trust Fund doesn’t have lots of “money” — and if you won’t acknowledge that, you shouldn’t be reporting on Social Security.
Beyond that, for the past several years benefit payouts have exceeded costs, requiring the government to, as the 2007 trustees’ report originally predicted would happen in 2016, provide “a flow of cash from the General Fund of the Treasury.” Unfortunately, the recession and the worst economic stewardship by any president since Franklin Delano Roosevelt lengthened the Great Depression by eight years caused the drain on the Treasury’s General Fund to begin six years sooner.
The system’s trustees told us in their 2012 report that “The 2011 deficit of tax income relative to cost was $148 billion, and the projected 2012 deficit is $165 billion.” In other words, those amounts which had to be covered by the General Fund are responsible for about 15% of the trillion dollar-plus budget deficits during the past and current calendar year. How can that be true, Stephen (and it is) if the Social Security “Trust Fund” has all kinds of money? Of course it’s not true, because it doesn’t. Social Security’s problems don’t “seem far off” — they matter now.
Cross-posted at NewsBusters.org.