Having It Both Ways
by digby
Krugman reprises a column he wrote the last time the social security vultures tried to destroy the program. Here’s an excerpt:
But those who insist that we face a Social Security crisis want to have it both ways. Having invoked the concept of a unified budget to reject the existence of a trust fund, they refuse to accept the implications of that unified budget going forward. Instead, having changed the rules to make the trust fund meaningless, they want to change the rules back around 15 years from now: today, when the payroll tax takes in more revenue than SS benefits, they say that’s meaningless, but when – in 2018 or later – benefits start to exceed the payroll tax, why, that’s a crisis. Huh?
I don’t know why this contradiction is so hard to understand, except to echo Upton Sinclair: it’s hard to get a man to understand something when his salary (or, in the current situation, his membership in the political club) depends on his not understanding it. But let me try this one more time, by asking the following: What happens in 2018 or whenever, when benefits payments exceed payroll tax revenues?
The answer, very clearly, is nothing.
The Social Security system won’t be in trouble: it will, in fact, still have a growing trust fund, because of the interest that the trust earns on its accumulated surplus. The only way Social Security gets in trouble is if Congress votes not to honor U.S. government bonds held by Social Security. That’s not going to happen. So legally, mechanically, 2018 has no meaning.
During the last election Democratic pollsters did a lot of work on messaging this problem and what they found wasn’t very hopeful. As one would expect, people are very confused. And in the best case most of them believe that the government “raided the trust fund” when it invested our money in US government bonds — the safest investment in the world.
I don’t know how to unravel that except to ask people what they think the government should have done with the money — put it under the mattress? Or literally in a lock box at Fort Knox? Or was it a really good idea to invest the money and have Social Security “live off the interest?” Nobody gets it. They think the money’s been “stolen” not invested and it’s nearly impossible to get them to think otherwise. Well played, Pete Peterson.
The country has been misled on all these issues for years by people with an ideological agenda. And now it’s to the point where very few people can sort it all out. They just “know” that the system is going broke. It’s a problem.
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