Karl’s Mighty Hammer
Charles Krauthammer almost had us fooled this time. A column on Bush’s plan to rape Social Security was headed “Bush’s Bummer of ‘42.” Could arch-conservative columnist Krauthammer be among the growing number of Republicans who are beginning to see that the Emperor has no clothes? Dream on. The entire thrust of the piece was that if Bush wants to get younger people on board, he needs to quit talking about ‘42 and impress upon our impressionable youth that the crisis is NOW!
It took us longer than usual to see where the craphammer was going, because (apart from the headline) this is how he started off:
“2042. I do not know if the president’s Social Security reform will pass, but if it does not, its demise will be traced to that point in the president’s State of the Union address when he warned that the system would go bankrupt in 2042. It was a disastrous moment.”
Fools that we are, we thought Mr. K. was referring to either of two errors of fact– the president’s continued misuse of the term “bankrupt,” and the date, which the Congressional Budget Office reckons will be 2052, not ‘42. Such gross errors really should have been a disastrous moment for the president’s agenda. But, no… Krauthammer is is just winding up to pitch some more propaganda lies and distortions.
Here’s his fifth paragraph:
“Let’s start with the basics. The Social Security System has no trust fund. The system is pay-as-you-go. The money goes to support that year’s Social Security recipients. What’s left over is ‘loaned’ to the federal treasury. And gets entirely spent….”
Hmmm. That’s the basics, certainly! The basic LIE. Can’t say we’ve ever seen such a casual trivialization of a couple trillion dollars, which is the cumulative total of the money that has been “left over” so far. And it’s been “loaned” to the fed, which has spent it all. OK. Most of us understand the nature of a loan, so we have to wonder why he put it in quotes. Our understanding is that in accordance with the law, the Social Security “left overs” have been invested in treasury bonds. Issuing bonds is indeed a way of borrowing money, but surely that’s the whole point! There is a problem only if there is some question about the borrower’s ability to repay the loan. And investment of the Social Security surplus in treasury bonds is mandated precisely because they are the primary fiscal instrument of the United States of America and therefore risk free. As good as gold. As sound as a… sound as a… dollar?. Oh.
He repeats the other BASIC LIE, that at the point when Social Security income is less than expenditure– the system will be BANKRUPT. Here’s the thing, Mr. Krauthammer– if we except Karl Rove’s (and the president’s, and your) definition of bankruptcy, then the United States is bankrupt now.
One other curious thing– Krauthammer says the notion that the system will not be bankrupt until 2042 “…reinforces the notion that there really is a trust fund from which we will be drawing to pay the elderly for the quarter-century between the years 2018 and 2042. There is not. It is just paper.”
Treasury bonds are “just paper.” Currency is “just paper” too (not coincidentally, currency itself is a “note” or representation of a loan from the government to the person holding it). The balance in your checking account is “just paper.” Your stock-market portfolio is “just paper,” only moreso. If you are lucky enough to have a trust fund, it’s “just paper.” Curious that Wall Street is so anxious to get their hands on it, if it’s “just paper.”
Krauthammer is using twisted logic right out of Karl Rove’s playbook– say anything, no matter how ridiculous, and people will believe you if you say it often enough. But Krauthammer has done a good job of illustrating the Liar’s Downfall. The more lies you tell, the harder it becomes to keep them all straight. And in trying to strengthen the president’s case, Krauthammer has done nothing but point out the logical flaws in the Reform argument.
This particular column makes “Pulitzer Prize-winning conservative columnist” Charles Krauthammer look sillier than usual. We hope he got a good price for it.
After all, the Administration has been known to pay “journalists,” and we know that Krauthammer is a confidant of Karl Rove. Krauthammer “consulted” on Bush’s State of the Union speech, then sat around with other paid “contributors” on Fox News to praise it.
The media whores will keep cashing in as long as they can, or until some innocent child points to the president and yells… “the Emperor has no clothes!”
–SG
What do you think? Please enter a comment below.
February 24th, 2005 at 7:23 pm
Craphammer. Love it! I think eventually we will find out that lots of conservative columnists are on the payroll from the whitehouse along with Rush Limburger plus everyone at Fox so-called-News. Nobody could believe that crap no matter how hard they hammer it. Hey, what is the difference between the Hindenburg and Rush Limbaugh? One is a flaming nazi gas-bag and the other was an airship
February 25th, 2005 at 9:15 am
I don’t disagree with the fact that using the word “Bankrupt’ is misleading. Bankrupt means total failure, and in 2042 or 2052, social security will still be able to pay out at least 73 cents on the dollar. It will not be in total failure. The use of the word is meant to scare people who are unwilling or unable to think about the issue for themselves.
But I do think calling the social security surplus a trust fund, is a bit misleading. Yes the surplus is invested in treasury bonds. The government takes the cash we pay to them for social security tax, they spend it, and then they give us an IOU called a treasury bond. These bonds are backed up by the full faith of the US government damn it, so they are as good as gold! One doesn’t expect the government to default on those obligations/bonds. But who really pays when those bonds need to be cashed in? The government does not and will not have the money to pay the bonds due to the budget deficit, so they are left with a few options. They can cut spending (not likely to happen), increase taxes (more likely to happen), or borrow from foreign countries (very likely to happen and thus increase our national debt). One would expect a trust fund’s money to be available for them when they have the need to turn it into cash. The only problem with the SS trust fund is, when we are ready to cash in the treasury bonds, we are going to have to reach out with our right hand, and pay ourselves with our left hand. I wouldn’t necessarily say that is a trust fund that works. Maybe we should fix the trust fund and make it work more like a true trust fund. Maybe one way to fix the problem is private investment accounts. Maybe it’s not. But it is a debate that it wouldn’t hurt for us to have.
Obviously the president is saying we have to fix social security now rather than later, because it is politics as usual. “Don’t hate the player, hate the game.” Tupac 1994. Seems to me that the real issue is our government’s lack of fiscal responsibility. Social Security is only a small percentage of our real national debt problems. Medicare is at least 4 times as big of a problem. Medicare is already running a deficit. But who is talking about that? Who is talking about the fact that within the next 20-50 years, every dollar we pay in taxes, will go directly to pay interest on our national debt. That to me is the really big elephant standing in the middle of the room, but nobody admits it is there. And yes, that elephant has no clothes and it smells really bad!
February 25th, 2005 at 5:35 pm
Small man, you’ve obviously given this a lot of thought and your comments are appreciated, especially since they tend to support our point of view– that there is no crisis, but one is being manufactured by the Administration. Bush himself has said that the private accounts– oh, excuse us please– INDIVIDUAL accounts won’t fix the “bankruptcy problem.” So why are they pushing so hard for them? And another thing– we’re talking laws passed by Congress, and Bush has nearly absolute control of Congress, so why is he promoting his scheme to the public? Oh, excuse us again, we mean his hand picked audiences.
But we probably should gently correct you about the nature of the Social Security Trust Fund, which is a real fund, with real Trustees. It’s not the left hand borrowing from the right. If the government had not been able to borrow from the Trust Fund, it would have had to borrow elsewhere and that money would have been owed to someone else. Well, it probably wouldn’t hurt to refer you to the “Horse’s Mouth,” by which we mean the Trustees themselves. If we can get this link to work, it will take you to a summary of the 2004 Annual Report by the Trustees of the FOUR separate Trust Funds.
http://www.ssa.gov/OACT/TRSUM/trsummary.html
Please compare it to what the Administration is saying, and ask yourself why they are distorting the situation. Who benefits from the changes that the White House is proposing? How can they spend so much money and effort on a manufactured crisis, while ignoring the smelly naked elephant?
Thanks again for your comments!
February 26th, 2005 at 9:25 am
The Federal Reserve Chairman is actually speaking about the big elephant! Two quotes from Greenspan before the Senate Special Committee on Aging today. When speaking on Social Security he said “a review of current commitments to aging Americans was urgently needed and the government must give people time to prepare for the fact that they may have to work longer, save more and spend less.” Also he said “Under existing tax rates and reasonable assumptions about other spending, these projections make clear that the federal budget is on an unsustainable path, in which large deficits result in rising interest rates and ever-growing interest payments that augment deficits in future years” He also gets to my point that the trust fund is not sufficient when talking about our inablitly in the future to meet current social security benefits expectations “Because benefit cuts will almost surely be at least part of the resolution, it is incumbent on government to convey to future retirees that the real resources currently promised to be available on retirement will not be fully forthcoming”
Please don’t take this as an argument in favor of President Bush’s agenda. But it may shed some light on the fact that at least the Fed Chairman thinks this issue should be debated and is urgent somewhat urgent. He made one further statement on the urgency “Something has got to give soon because we don’t have the choice of not resolving this issue because of the inexorable turn of the calendar” adding that “2008 was shaping up as a deadline year since so many baby boomers hit retirement age then”
Just some food for thought.
February 26th, 2005 at 11:55 am
Greenspan is an interesting case to the extent that he has largely managed to transcend politics– despite being essentially a political animal from the beginning. He is a fiscal conservative, so lately that has tended to distance him from what passes for conserviative politics in Washington, especially the “Neocon” element. It was hardly a ringing endorsement of the presidents plan, and conservative commentary has tended to steer clear of it where we just know they would be all over it like a rash if they could spin it as an endorsement. Note Greenspan’s use of the terms “assumptions” and “projections.” He only talks about qualified (reasonable) assumptions for spending, and the projections are based on the current circumstances as continued into the future. The projections of the key dates as prepared by the Congressional Budget Office and the Social Security Trustees both use very conservative assumptions. Some would say extremely conservative assumptions, about things like growth of the economy, the nature and size of the work force, inflation of wages and costs, etc. There is very little difference between the sets of assumptions used by the two offices, yet the projected dates are 10 years apart. Once specific assumption growth of the economy, was based on a recent period which included the current recessionary period. If they had used the average growth over, say, the last 20 years, the picture would be entirely different and the “crisis” dates could be beyond the visible horizon– 50 to 100 years from now. We have perceived similar problems in Social Security in the past, and have dealt with them well enough that the system has survived for 75 years. There may very well be problems in the future, but there is nothing in Social Security that really needs to be dealt with now. And you’ve hit another nail pretty close to dead on the head– fussing over the
“Social Security Crisis” does indeed distract our attention from other crises including but not limited to Medicare and a current budge deficit of hitoric proportions. The administration could be cleverly positioning itself to
wash its hands of these other problems with the exuse that “hey, we tried to fix Social Security but you wouldn’t let us. We’re outta here.” They’re buying time, and the bulk of these messes are going to be there for the next administration to deal with.