Et tu, Fact Checker?
In its review of Washington Post “Fact Checker” Glenn Kessler’s shameful refusal to call the Democratic dissembling on Social Security, Ethics Alarms saved the best—which is to say, worst—for last.
Beginning with a statement typical of Obama Administration and Democratic leadership positioning on the subject, Rep. Xavier Becerra’s (D-Calif.) “Social Security has never contributed a dime to the nation’s $14.3 trillion debt…not one penny to our federal budget deficit this year or any year in our nation’s history,” Kessler gives a brief history of Social Security, why it has no more money, and concludes with this nonsense:
“Becerra is sincere in his convictions and his statement is true, so far as it goes. Yes, Social Security in the past has not contributed to the nation’s debt. But it’s basically a meaningless fact and actually distracts from the long-term fiscal problem posed by the retirement of the baby boom generation and the shrinking of the nation’s labor pool.”
Kessler conveniently omits the other key fact, that Social Security’s “funds” are really just I.O.U.’s from a federal government that looted it and will have to borrow the trillions needed to fund its obligations, which will contribute to the burgeoning debt. And what does he mean “Becerra is sincere”? How does Kessler know that? Since when has the presumption been that any politician is sincere, especially a Democrat talking about Social Security? If he’s sincere, Becerra is ignorant. If he’s competent, then he’s lying.
Even this isn’t rock bottom for the Post’s Fact Checker, that fearless paladin of truth, that brave exploder of mendacity and obfuscation, oh no indeed! Here is how Kessler, who usually marks lies with one to four “Pinocchios,” rates the unequivocally false impression that Social Security has no relevance to the debt, created for a trusting public by statements like Becerra’s:
“True, but False.”
I’m not kidding. That’s his “verdict;” that’s how the Fact Checker characterizes a misleading statement. But there’s a another name for “true but false”: deceit. Using a statement that is literally true to make the listener believe something that is a lie. Deceit is lying. It is a particularly effective kind of lying, and in Washington it is a sadly common form of lying, practiced by masters. But it is still lying.
The Fact Checker, by referring to a deceitful statement as “True but False,’ gives truth and falsity equal billing, which is absolutely wrong. In deceit, truth is used to create deception. In fact, the statement “True but False” is itself deceitful, literally true but presented in order to create a false belief that how Becerra, Obama and other Democrats characterize Social Security is something other than a lie designed to misinform the public for political gain.
Ethics Alarms 
So, we have 14.3T in outstanding debt, plus an obligation to fulfill IOUs to Social Security? Or is Social Security IOUs part of the 14.3T debt?
According to the U.S. Treasury, about $4.5T of the $14.3T debt is in the form of government account series. This includes money owed to the social security trust fund.
Source: http://www.treasurydirect.gov/govt/reports/pd/mspd/2011/opds062011.pdf
So, by that reasoning, China adds to the debt as well, right? We just don’t have an obligation to bail them out if they stop getting paid?
Yes. You owe China around $1.2T, or around $1.3T if you count Hong Kong (well, hopefully not you personally). I’m not sure about the bailout. The US government seems to like bailing out the Chinese. Supposedly, one of the reasons why Fannie Mae and Freddy Mac were bailed out was because the Chinese owned a lot of their bonds (see http://dealbreaker.com/2008/07/too-chinese-to-fail-fannie-and-freddies-other-government-sponsors/ and http://www.bloomberg.com/apps/news?pid=newsarchive&sid=afbSjYv3v814).
They are NOT counted in the debt. They do, in reality, represent additional debt.
Kind of. Social security obligations are not counted in the debt. The idea is that people paying into the system should cover people taking money out of the system. Because there is currently more money going into the system than going out of the system, a fund of money should accumulate to pay for obligations to future recipients should a time ever come when the amount collected exceeds the amount coming in (due to the aging population of the United States, such a time will indeed come).
Unfortunately, rather than saving these surpluses, the US government borrowed money from the Social Security Trust to spend on current obligations. This money was replaced by IOUs. These IOUs are counted in the national debt figures.
They aren’t counted, Eric. We owe money to ourselves. That’s why Obama keeps saying that SS “doesn’t contribute to the debt.” It will, but not until we try to pay it back.
Source?
Some money owed by the government to itself is counted in the $14.3T debt. See the right-hand column under “Amount Outstanding” (specifically, the 11th column, Government Account Series) in the chart here: http://www.treasurydirect.gov/govt/reports/pd/mspd/2011/opds062011.pdf
What does “Intergovernmental Holdings” mean but money the government owes to itself?
What Obama is saying is that Social Security obligations are not included in the debt. The fact that the US will owe some money to some future retiree in 2025 or some future date is not included in the $14.3T debt. However, more money has been coming in to the Social Security trust fund than has been going out (there are more workers than retirees). This money has been placed in a Social Security Trust Fund, with the promise that it would be earmarked for when the number of retirees increases relative to the number of workers. Unfortunately, the US government decided to dip into the trust fund to pay for current spending, replacing it with IOUs. These IOUs are counted in the debt.
A good analogy would be a parent who decides to pay for his or her child’s college education. This future obligation would not normally be considered a debt because the parent doesn’t really owe this money to anybody, it’s just money that he has decided to pay in the future. In order to fulfill this obligation, the parent sets aside $100 per month. When the child is 10, the parent decides to spend some of this accumulated money to buy a car. He or she replaces it by writing an IOU to his or her child for an equal amount. The parent would consider this to be part of his or her debt.
If your interpretation is correct, then that would mean that the claim that “Social Security has never contributed to the debt” is an OUTRIGHT lie. I would think if that were true, even Fact Check Boy would say so.
I have a substantial debt, and I’ve “borrowed” money from my son’s college account. I don’t count that as my debt for finance purposes. It has always been represented in the media and by officials that the Social Security IOUs are exactly like this, and are NOT in the 14 trillion figure.
Not that it matters to Kessler’s weasel words, but it is ridiculous that we can’t get a straight answer.
It is true, but false (sorry, now I want to use this weasel phrase). If they hadn’t borrowed from the Social Security Trust Fund, they would have had to borrow the money from somewhere else, so is Social Security contributing to the debt? Yes, but no.
It does seem a bit irrational to count the IOUs in the debt. I’m not sure the U.S. government is tainted by rationality when it comes to Social Security.
Straight answers are generally not something that governments (and nowadays, the media) like to give.
Wouldn’t it be more accurate to say that social security contributed to hiding our actual debt?
I think that Eric’s analogy wasn’t quite right. The parent isn’t paying into the college fund directly. It’s the kid’s aunt or godfather that is paying in.
That’s sure how I see it, tgt.
I’m now confused. If you agree with me, then saying social security did not add a penny to our debt is a completely true statement. Social Security is not contributing to our debt one iota.
Yet. But it will, and we know how much. So it needs to be taken as seriously as the debt.
There’s a difference between “it will later” and “it is” or “it has been.”
I agree that social security should be tackled, but that doesn’t make this post any more accurate.
The nature of the comments at issue is to deceptively mislead that it should NOT be tackled. And you are noting a distinction, not a difference.
Distinction without a difference? In that case, you are a 3 year old boy. Tenses change meaning greatly.
Okay. No analogy is perfect.
Yes, I know I spelled a word wrong in the headline for the second time this week.
These aren’t the real numbers, so, just think of it as an analogy.
Where we ended up is this?
Debt borrowed from China: 9.8 Trillion
Debt borrowed from Social Security 4.5 Trillion
Total Debt 14.3 Trillion
Then you say (can say) that Social Security will add to our debt 4.5 Trillion dollars, that’s fine. But then the Debt borrowed from SS goes down in a zero sum fashion.
Now, what were the terms of borrowing money from SS? Are we paying interest? If so, sure, we have to borrow money to pay interest on debt. But SS isn’t contributing to our debt problem, having interest due on debt owed to SS is contributing to our debt problem. But that’s not SS’s problem.
To which I now have this comment for myself. If SS is currently still taking in more than is being paid out to retirees, then the SS checks should still be going out on Aug 3 and Obama’s statement is a complete lie. SS hasn’t loaned the Govt any future money, so SS is balanced by SS taxes and interest payments from debt issued to US. If the US stops paying SS the interest payments, how long will SS sustain on income from tax collection alone? (Well if payments are more than collections, awhile.)
It’s hard to know what would happen during a government shutdown because the happen so rarely. The government could just decide to keep payroll taxes rather than adding then adding them the trust fund or paying out to recipients, I suppose. Apparently this is unlikely. In the last government shutdown, social security continued paying recipients because Congress does not need to authorize payments from the social security trust fund. See http://money.cnn.com/2011/02/23/news/economy/shutdown_social_security/index.htm for more. Of course, as I said before, its hard to say what will happen. Don’t rely on what I say here if you are counting on social security payments during a shutdown.
It’s hard to say how long social security can maintain itself. This will depend on when future recipients retire, how long recipients live, future inflation and interest rates and a myriad of other factors. According to this article: http://www.msnbc.msn.com/id/41293592/ns/politics-more_politics/t/social-security-fund-will-be-drained/ the social security trust fund will run out of money by 2037. This figure is pretty uncertain. I doubt whether the interest paid would make much difference.
On a side note, the article cited states that recent payroll tax cuts are to be made up from general revenues, which will add to the debt.
The Social Security trust funds invest in “special issue securities”, that is, securities that are issued by the government only to the trust funds. They do pay interest, currently 2.625%.
Source: http://www.ssa.gov/oact/progdata/intRates.html
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