Friday, February 11, 2005

Bush lies (again) about Social Security. Why does the media allow it?

In a speech in North Carolina, Bush said the following.
Now, some of you probably think there is a kind of -- a bank, a Social Security trust bank. But that's not what's happened over time. Every dollar that goes into Social Security has been paid out, either to retires or government programs. It is a pay-as-you-go system; it is a flow-through system. There is no kind of -- there are empty promises, but there's no pile of money that you thought was there when you retired. That's not the way the system works.
The fact is that the Social Security Trust Fund whose existence Bush denies consists of a debt that the Federal government owes to that fund. That debt is in the same category as the debt that the Federal government owes to anyone who buys Federal bonds.

If you buy a U.S. government bond, the government doesn't put that money into a bank account from which it retrieves the money when the bond matures. The government spends the money. So as Bush said, all the money in the Social Security Trust Fund has indeed been spent. But just as the government is obligated to repay those who buy Federal bonds, it is similarly obligated to repay the Social Security Trust fund. Failure to do that would be a default on a basic obligation. (Or doesn't Bush think that paying one's debt is an important value?)

After all, if Social Security were purely pay-as-you-go, why are we now collecting more in Social Security taxes than we pay out in benefits. The reason, of course, is to build up a surplus, called the Social Security Trust Fund. That surplus will continue to build until about 2018 at which time we will start to draw it down. But it is a lie to say that the Social Security fund does not exist. If that were the case, then for the past 20 years we have been collecting an extremely regressive tax to fund adventures such as the invasion of Iraq.

Surely Bush is not so stupid as to think that when one buys a government bond, or when one buys a corporate bond, or even when one puts one's money into a bank account, the money just sits there. Of course the money is spent. The purpose of a bond, or a loan of any sort, is to allow the borrower to have money to spend. But the condition is that the borrower will repay the debt when it is due. Even Bush is not that stupid; he must be able to understand that. The only conclusion I can draw is that Bush is once again lying deliberately. Why does our mass media let him get away with it?

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