This week, readers deluged us with comments about Social Security and the federal deficit, and continued to e-mail us about our new FactCheck Quiz.
In the FactCheck Mailbag, we feature some of the e-mail we receive. Readers can send comments to email@example.com. Letters may be edited for length.
Don’t Blame Social Security
I understand your argument about Social Security’s impact on the red ink ["Democrats Deny Social Security's Red Ink," Feb. 25] and to a certain point your article is correct in claiming that Social Security is having a major impact on the red ink in today’s budget. At the same time, I find it very misleading to narrow the discussion to whether it is providing red ink in today’s budget without a discussion of why that is.
The Democrats are right that the Social Security is self funding and does not contribute to the red ink. The U.S. citizens have paid their Social Security taxes into the Trust Fund and they should have every expectation that they would be paid back.
The problem is how we have treated the Trust Fund as a cookie jar and constantly raided it to make the yearly reported budget deficits look smaller. Back in the 2000 campaign, Gore was mocked for his Social Security lock box idea. We knew this day was coming, while the recession moved up the date, it is no surprise that we were going to need to start paying back the Social Security Trust Fund in this decade. The problem is that in the last decade, we used the Trust Fund money to finance tax cuts and other spending, while we built up a large structural deficit in the budget that is making paying back the Trust Fund more of a financial crisis.
By just focusing the article on Social Security and red ink in today’s budget, it makes it sound like a Social Security problem, which it is not. The article needs to be modified to make clear it is NOT a Social Security problem, but the result of the failure in budgeting over the past decade that makes it more of a crisis today.
This "fact check" is utterly disingenuous. The contribution to the deficit cited in your analysis only exists because the taxes contributed in previous years were not put into the trust fund, except in the form of Treasury bonds, being used instead to mask deficits in other areas for many years. The point that the Democrats you criticize are making is that Social Security is not currently a cause of structural deficits. Taxes were raised years ago to create a trust fund in preparation for the day when payouts began (temporarily) to exceed contributions. Had the money not been used to pay for defense and other areas of the budget, there would be something other than Treasury bonds in the trust fund. Those arguing for various "fixes" of Social Security — extending the retirement age, reducing benefits, private accounts — are using this as a pretext for their preferred changes. Your analysis brackets all of this to make a claim that doubtless will be used by those arguing that Social Security is (yet another) failed government program. In some instances, bracketing context makes fact-checking utter distortion, and this is one of those instances.
Mark A. Pollock
Please correct me if my understanding is wrong. Yes, we paid out more in Social Security benefits this year than we received in Social Security payments. However, the only reason we had to "borrow" money to make those payments is because Social Security is now part of the general budget funds. The Social Security trust fund has extra money in it, but that money has been loaned to the government to cover general budget expenses other than Social Security benefits. If we looked at Social Security as a completely separate fund, many billions more have been paid in than have been paid out.
If you had a savings account (Social Security trust fund) that had lots of money in it, and in any given year, your total expenses were more than your income, you could take money out of your savings account to pay for those extra expenses. You would not have to go to the bank and take out a loan to pay those extra expenses. That is why the Democrats can argue that SS is not adding to the deficit (borrowing). Now, obviously, if every year you have to pay more expenses than you earn in income, eventually your savings account would be depleted.
This is why something has to be done about Social Security. But to say that spending more on Social Security benefits in any given year than is received in payments is adding to the deficit is also disingenuous to some degree because it makes it sound as if all the money that had been paid into SS had been paid out and now, since there is less coming in than is going out, all the rest of us have to pay higher taxes every year now because all those retirees took too much money.
This is why Al Gore talked about the "lock box." When Social Security was added into the general budget funds is where things started to go off balance, because it became harder to sort out what was actually happening. How SS should be fixed is up for dispute. But I think the Democrats are more right than wrong when they say it doesn’t really contribute to the deficit.
An organization called FactCheck should be really embarrassed to get something as wrong as you have. You have not only failed at fact-checking but at basic logic. Let’s look at an analogy. Let’s say I take a portion of my paycheck and put it in a savings account, i.e. I am running a surplus. Later I spend all of my paycheck plus spend some of the money in the savings account. The only "deficit" I am contributing to is in making the surplus I ran earlier smaller. So let’s say I run a $10,000 surplus while putting money in the account and I take out $10,000 to spend the next year. Have I run a deficit for those 2 years? Obviously not. Only someone who can’t do basic math would say otherwise (i.e. FactCheck). Not has SS not done anything other than that depicted in my analogy, it is forbidden by law to do so. I am thoroughly embarrassed for you guys to get something so simple so wrong, and on such an important issue!
On this issue I believe the Democrats are correct. Currently Social Security is in the black and does not contribute to the deficit. Saying otherwise implies that Social Security is another underfunded program that is subsidized by the taxpayer. Historically, Social Security was overfunded; that is, tax receipts exceeded revenues. The excess was "borrowed" by Congress in exchange for special Treasury notes — legal obligations of the United States — bearing interest. Today, Social Security is fully funded through tax receipts and by redemption of these notes and payment of interest thereon.
The government did not have to borrow any money to "finance" Social Security. It had to borrow the money to repay a lawful debt owed to Social Security. Over many years, instead of raising taxes or cutting programs, succeeding Congresses chose to help fund government spending by "raiding" excess funds in the Social Security Trust Fund and issuing debt instruments that are now coming due. The obligation to repay these notes is one more claim on the revenues of the United States, no different than the obligation to repay Treasury notes and bonds sold to private investors. To my knowledge, no one has ever claimed that government borrowing to repay private investors is financing those investors nor has anyone accused any private investor in government bonds of contributing to the deficit.
From the perspective of government revenue, this point may seem like semantics, but from the perspective of political discourse, accusing Social Security of "contributing" to the deficit is harmful. The misstatement perpetuates the false stereotype of greedy senior benefiting from an unfunded or underfunded program, when, by normal accounting principles, the program is fully funded with assets (Treasury interest-bearing notes) and tax receipts sufficient to carry the program to 2037.
Michael P. Ruark
Lake Forest Park, Wash.
For the most part, I agree with your analysis of Democrats’ comments about this topic. But there is a very important point I think you overlook. Here’s the closest "mention" I could find: "Payroll taxes exceeded benefit payments regularly until 2010."
It was in the early 1980s, I think, when employee FICA withholding was increased, to build a surplus that would help pay when all the Boomers retired. So there is a very large surplus in Social Security ($2.7 trillion, if memory serves me). Rather than relying on younger workers to totally finance our Social Security payments, we Boomers "paid ahead" for part of our own retirement.
That said, I realize idiots in both parties spent that surplus on day-to-day operations of the government, and those IOUs must now be paid back + interest using general funds, which will add to current deficits. And, after the "surplus" is spent, payments out will exceed payments in, just as you wrote.
I think it’s important to note that politicians and taxpayers actually did the right thing, rather than the politically expedient thing, or a short-term fix, back in the early 1980s. And I’d like this explicitly said, so people don’t automatically think that Boomers and other geezers are just trying to put their hands on the pockets of the young. I’d like them to know that fiscally irresponsible spending in the past — under both parties — created most of the current debt and deficit problems, NOT Social Security. Although there is a long-term structural unsustainability in Social Security, if people don’t have a complete picture, they may make imprudent decisions.
A Quiz Bug
I think this [FactCheck Quiz] is a good idea, but I don’t like the way it is constructed. Since a wrong answer gets an excellent response, which clearly shows what the correct answer was, it is silly and irritating to have to go back and answer the question again in order to go on to the next question. It feels a little insulting – “go back and do it again, but do it the right way this time.”