I gave my daughter a tip on being a media critic: “If you see a newspaper article with the words ‘Social Security’ in the title,” I told her, “it’s probably bad.”
Sure enough, the article we were looking at–“Fixing Social Security,” by Washington Post columnist Allan Sloan (4/29/12)–was pretty terrible.
Sloan’s argument is that cuts in Social Security benefits are “inevitable” because of “projections that Social Security’s cash expenses will exceed its cash income as far as the eye can see.” Note the important qualifier: “cash income.” That means excluding Social Security’s investment income. Including that income, Social Security is in the black for the next 21 years, according to the Social Security Trustees’ projections.
Why exclude that investment income? Sloan explains:
We will skip all that stuff about the Social Security trust fund (which has accounting and political significance but no economic significance) and go straight to the number that matters.
To wit: Last year, the Treasury had to borrow $160 billion to give to Social Security so that its checks (okay, its electronic deposits) wouldn’t bounce.
Let’s not skip the part about the Social Security trust fund–it’s important. It’s got $2.5 trillion in U.S. Treasury bonds in it–I’d say that’s rather significant, economically speaking.
Why does the Social Security trust fund have so many Treasury bonds? Because back in the 1980s, the federal government decided to “save” Social Security by raising the payroll tax (and cutting benefits as well). The idea was that Social Security would take in more than it needed in the late 20th and early 21st centuries, loan that money to the Treasury, and then in the mid-21st century, the Treasury would pay it back, thus helping to pay for the Baby Boomers’ retirement.
The loaning money to Treasury part worked as planned. Now that it’s time for the paying back part–suddenly the trust fund has “no economic significance.”
Look at the word game Sloan’s playing: “The Treasury had to borrow $160 billion to give to Social Security….” Paying one’s debts isn’t a gift–it’s a legal requirement.
It’s true that Congress could rewrite the laws so that Social Security would forgive those debts–but why should it do that? It would implicate Congress in the grandest of all larcenies–diverting money from the paychecks of working Americans with a promise that it will be used to help pay for their retirements, and then refusing to make good on that promise on the grounds that it has “no economic significance.”