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The Spectacle Blog
Note to White House budget director Jacob Lew: when you open a newspaper op-ed by using the phrase “win the future” in a a non-ironic way, you forfeit your right to be taken seriously as a fiscal analyst.
In a “no Social Security problem to see here” piece for USA Today, Lew writes:
The budget put forward by President Obama last week is a blueprint for how we can live within our means and win the future. As this begins the budgeting process in Washington, we need to be clear about the causes of the pressing fiscal problems we face. Specifically, looking to the next two decades, Social Security does not cause our deficits.
Social Security benefits are entirely self-financing. They are paid for with payroll taxes collected from workers and their employers throughout their careers. These taxes are placed in a trust fund dedicated to paying benefits owed to current and future beneficiaries.
Looking beyond Lew’s buffoonish attempt to make the “WTF” phrase happen, the rest of the argument falls short on several levels. For one, it’s silly to talk in terms of Social Security not causing our deficits. In any budget that’s running a deficit, any money that is spent is part of what’s contributing to the deficit. This is especially true in the case of Social Security, which will be the biggest component of government spending over the next decade. From 2012 through 2021, the U.S. is projected to spend $9.9 trillion on the program, according to the Congressional Budget Office, representing more than one out of every five dollars spent by the federal government over that period. That’s $2 trillion more than will be spent on defense. To say that this won’t be put pressure on our deficit is absurd on its face.
What’s more absurd is Lew’s insistence on talking about the Social Security trust fund. The Social Security program is financed primarily by payroll taxes. When the amount of tax revenue collected exceeds benefits, the surplus is theoretically put in the trust fund. But in reality, the federal government uses that surplus to finance ongoing government operations, and puts a stack of bonds — or IOUs — in the funds instead. So, while it’s true that for the next few decades, there’s theoretically enough money within the system to keep paying beneficiaries, the program is currently running a deficit when we acknlowlege that ultimately everything comes from the same bank account. Specifically, in a report last month, the CBO wrote that, “surpluses for Social Security become deficits of $45 billion in 2011 and $547 billion over the 2012 to 2021 period.” To meet its obligations to beneficiaries, either the government will have to raise taxes, cut other government services, or issue more debt — either way it’s contributing to our budgetary problems.
Way back in 2007, candidate Obama drew the ire of progressives when he dared to refer to the “Social Security crisis.” In their world, the program is in splendid shape, and they spent most of last year raising alarms over the Obama fiscal commission, which they saw as a pretext for gutting Social Security. But Obama clearly got the message — in his State of the Union, he rejected any real reforms to the program and ignored the problem in his budget. Now his administration is setting the stage for a battle with Republicans should they propose any changes to the program, by echoing progressive denialism.
View all comments (9) | Leave a comment
More Blog Posts by Philip Klein
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Gene| 2.22.11 @ 1:06PM
And this is the nations budget director !!!!,, we are in a sh-- load of trouble.
Oldefarte| 2.22.11 @ 1:22PM
http://www.youtube.com/watch?v=DQj-xBH30-I
Thomas Elleman| 2.22.11 @ 1:30PM
Although separate taxes are collected for Social Security, the
money left over after benefits are paid is used to fund
other government programs or to pay down the debt, from: A series of issue summaries from the Congressional Budget Office 1 http://useconomy.about.com/gi/.....sequence=0 August 1, 2002
By law, the Social Security program is treated as an
“independent financial entity.
It is an off-budget” entity, and its financial figures are displayed
separately from the rest of the budget. The
separate display, along with the use of trust funds as
an accounting device, is a means of distinguishing the
program’s finances from those of other government
activities. However, the distinction can be confusing
when it leads people to think of Social Security as an independent fund.
The concepts of “offbudget”
and “on-budget,” are often confusing. Few people
can understand how Social Security can be off-budget and
part of the budget at the same time. To reflect it as offbudget
is to suggest that it is an independent financial
entity, which it is not. The money received for and dispensed
by the program flows to and from the federal Treasury
David W| 2.22.11 @ 1:39PM
I believe that Mr. Jacob Lew must have had money invested in Madoff funds and is still waiting for his latest profit sharing check.
What a stupid jackwagon. If this is who we have running the country then we really are screwed.
Thomas Elleman| 2.22.11 @ 1:48PM
The government spends the Social Security Trust Fund. In the private sector this would be embezzlement.
Embezzlement is the act of dishonestly appropriating or secreting assets by one or more individuals to whom such assets have been entrusted.
Thomas Elleman| 2.22.11 @ 1:50PM
More often than not, embezzlement is performed in a manner that is premeditated, systematic and/or methodical, with the explicit intent to conceal the activities from other individuals, usually because it is being done without their knowledge or consent. Often it involves the trusted person embezzling only a small proportion or fraction of the funds received, in an attempt to minimize the risk of detection. If successful, embezzlements can continue for years (or even decades) without detection. It is often only when the funds are needed, or called upon for use, that the victims realize the funds or savings are missing and that they have been duped by the embezzler
Ken (Old Texican)| 2.22.11 @ 2:45PM
Well spoken, Thomas.
Oldefarte| 2.22.11 @ 4:09PM
First, anyone who attempts to masquerade a cause-and-effect between a tax increase and and economic revival is simply a MORON. Previously [and currently] there is a finite amount of economic dollars/money available, with the PUBLIC [GOVERNMENT] sector fighting with the PRIVATE [NON-GOVERNMENT] for same. The more the public sector uses/consumes, the less is available for the private sector's usage. The government starves the economy of money, and that is why we now have 10-15% unemployment presently. The government has stolen [borrowed?] $1 trillion from the SS Trust Fund and OWES same to its beneficieries current and future]. If the government would be forced to PAY BACK said $1trillion that it OWES, ther would not be a PROBLEM with SS [and if there was thereafter, said could be solved by simply eliminating the current dollar ceiling on wages (currently $100000) for SS taxiation]. SS is NOT a governmental LIABILITY....it is a governmental ACCOUNTS PAYABLE. The recipients of SS PAID FOR their SS throughout their lifetime of payroll deductions and could not receive SS payments until age 65. It was/is a FORCED RETIREMENT SYSTEM BY THE GOVERNMENT. It is not as you and most liberal loons say.....AN ENTITLEMENT. It is OWED TO its recipients, it is not GIVEN TO THEM AS A WELFARE PAYMENT!!!!!!!!!!!!!!
pappyg | 2.22.11 @ 5:23PM
This week President Obama said: "When it comes to choices about our budget and priorities, we have found common ground before, Ronald Reagan and Tip O'Neill came together to save Social Security". Excuse me, with all due respect Mr. President, as a member of the custodial generation, and more importantly a certifiable grandparent, I find your statement lacking in fact, an insult to my intelligence, and quite frankly, an affront to my 15 grandchildren. It's exactly why meaningful dialogue on this issue is so lacking; you can't begin with fairy-tale statements, and expect to end up with logical real-world solutions. The common ground you referenced began with Reagan and O'Neill sipping suds at an Irish pub in DC 30 years ago, and thirty years later millions of middle class working Americans are waking up with a financial hangover. In other words the “common ground” Social Security solution has put middle class America on shaky financial ground. No doubt Social Security has been a force for good, however post 1983 its morphed into a cancer on middle class working Americans. Evidence can be found littered across main street America; lost jobs, home foreclosures, bankruptcies, and financial institutions unable to fund business growth and new job creation. 2.54 trillion dollars of potential Social Security trust fund assets have been turned into a 2.54 trillion dollar debt. Mr. President, that’s a 5 trillion dollar net loss, and that’s what this conversation has to be about; “common ground” be damned.
Personally I pencil in the “I’m entitled” box, however at the same time the left side of my brain is asking, if you’re entitled who’s obligated? That intra-gray matter conversation informs me there’s more than one party who has a stake in the outcome of this Social Security debate. One wants their retirement benefits fully funded until the day they expire, and another would like to have more of their paychecks left to build their own retirement estates. That’s why this conversation belongs in the intra-generational conference room, and has to be built on “solid ground” not political common ground. We’ve completed a preliminary assessment of the issue, demonstrating the results of the 1983 “common ground” legislation: http://sobreport.com/?p=66 Then built a “solid ground” treatment plan that allows middle class working Americans, their families, and the communities they call home to prosper again: http://sobreport.com/?p=70 Finally Mr. President, common ground solutions crumble under financial tremors, while “solid ground” solutions are built to withstand financial quakes.