New York Times reporter Matt Bai writes a piece today (8/26/10) singling out a Democratic congressmemberwho talks aboutcuts to the federal budget. Thisis presumably an unusual, newsworthything worth writing about–hence the headline, “One Liberal Voice Dares to Say, Cut the Budget.”It’s worth pointing out thatother Democrats have proposed ideas likecutting military spending withoutgetting points for bravery.
The point of the piece is to attack Social Security. Bai cheers on the White House deficit commission, which he argues hasbeen unfairly attacked by liberals who are “mobilizing to discredit the panel’s work” and “pre-emptively oppose the panel’s findings.” These critics don’t get much time to explainthemselves, because Bai needs spaceto malign their ideas as an attack on bipartisanship. As Bai quips: “In other words, the two parties might actually work together on something. They must be stopped!”
Then Bai goes on to explain how Social Security actually works–and turns in a remarkablymisleading explanation:
The coalition bases its case on the idea that Social Security is actually in fine fiscal shape, since it has amassed a pile of Treasury Bills–often referred to as IOUs–in a dedicated trust fund. This is true enough, except that the only way for the government to actually make good on these IOUs is to issue mountains of new debt or to take the money from elsewhere in the federal budget, or perhaps impose significant tax increases–none of which seem like especially practical options for the long term. So this is sort of like saying that you’re rich because your friend has promised to give you 10 million bucks just as soon as he wins the lottery.
Getting the government to pay out benefitsfrom the money it has collected from citizens is like wishing your friend wins the lottery?
Economist Dean Baker points out that that Treasury bills are not “often referred to as IOUs.” Some in the media and some Republicans do that, yes, but it is actually unusual to speak of Treasury bonds this way.
So a New York Times reporter thinks expecting Social Security benefits is like believing you’ll win the lottery, because the trust fund is really a “pile” of “IOUs.” And he’s writing this in the news section.