How Bush lies about Social Security

In a speech in South Carolina, Bush said

[B]ecause we spend Social Security taxes on current retirees and other government programs, all that is left over in the so-called security trust is a bunch of filing cabinets with IOUs in them.

As a matter of fact, I went to West Virginia the other day to look at the filing cabinets, to make sure the IOUs were there -- paper. And it's there. And it's, frankly, not a very encouraging sight.

That must not be very encouraging for people who lend money to the US government. Is Bush suggesting that the federal government will not pay its debts, that federal IOUs are not good investments? Since the bond market did not crash after Bush's speech, most people apparently didn't believe him. Yet he expected his audience to take him seriously. How dishonest.

Whatever happened to the notion that it is the responsibility of our leaders to inform and educate those they wish to lead, not misinform and mislead them. I'll bet that Bush's Yankee father still holds those values. What happened to George W.'s values? Isn't honesty a value in Texas anymore?

He went on to say the following

Three years from now, when the first baby boomers start collecting Social Security benefits, the system will start heading toward the red. Less than a decade later, in 2017, Social Security will go negative. And by that I mean it will be paying out more in benefits than it collects in payroll taxes. More money going out than coming in. And every year after that the shortfall will get worse.

What does it mean that it will "start heading for the red" in three years but not actually start paying out more money than it takes in until 2017? He probably had something in mind, but most likely the intent was just to scare people since the words don't seem to mean anything.

Then he said,

In the year 2027, the government will somehow have to come up with an extra $200 billion to fund the system -- $200 billion more going out than coming in through payroll taxes. In 2034, the annual shortfall will be more than $300 billion a year. And by the year 2041, the entire system will be bankrupt.

The reference to 2027 is another example of dishonesty, and dishonesty of a form that is especially telling for Bush. He says that in 2027 $200 billion of federal IOUs will come due. How many dollars of federal IOUs come due this year? I suspect that it is more than $200 billion. Every year the government has to refinance much of its debt. And Bush's massive deficits aren't helping. If he wants to reduce the debt, he should start by reducing his deficits.

Finally, to say that the system will be bankrupt in 2041 means only that there will be no more federal IOUs to pay to the social security system. That should be good news. He has just complained about the burden the system will put on the federal budget prior to 2041. At that time, that burden will be eliminated. Let's celebrate instead of whining about it. If the government has managed to deal with an annual demand from the Social Security system until then, it can come up with more money after 2041 to continue funding the difference between payroll taxes and social security benefits. Bush has just demonstrated as much — unless he is arguing that the federal government will cease to pay its debts prior to 2041.

There are so many examples of dishonesty, it's hard to pick just a few, but here is one more.

I like the spirit of people of both parties coming together, and that was great. President Reagan and Speaker O'Neill said, we got a problem, let's come together to fix it. But they thought it was a 75-year fix; here we are, 22 years later. It's time to come up with a permanent solution.

Accountants don't talk about infinite horizons. The longest they project into the future is 75 years. That's why there was a 75 year fix 22 years ago. And it will probably be a 75 year fix. It wasn't just a 22 year fix as Bush seems to be implying. The only permanent fix is to dismantle Social Security. Then it will never be a problem again. Is that what he has in mind?