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Social Security Bunk — Again


Here we go again: another phony and misleading claim that somebody is “robbing Social Security.”

In this case it’s an ad launched on Sept. 22 by the anti-tax Club for Growth Action as part of a $700,000 campaign attacking former Wisconsin Sen. Russ Feingold, who is running to regain his Senate seat.

The ad, “18 Long Years,” accuses Feingold in an on-screen graphic of “robbing Social Security” during his time in office. The narrator is a bit more detailed, accusing him of “robbing the Social Security trust fund to pay for more government spending”

Either way, this claim is false; Feingold did no such thing. But this bogus claim is one that each party has been making against the other for many years, and neither side seems ready to give up this shopworn deception.

Back in 2006, when Democrats were using this line against Republicans, we called it “nonsense” and “tired old trust fund bunk.” And today it’s just as misleading.

What we said then — about Democratic ads accusing Republicans of “raid[ing] the Social Security trust fund” — bears repeating now when it’s a Democrat who’s the target:

FactCheck.org, Oct. 25, 2006: That line was bunk when Republicans used it against Democratic candidates in the past, and it’s bunk now. One leading Social Security expert called it “nonsense” as far back as 1999, and that still holds.

The ads refer to votes that don’t directly affect Social Security at all. … Current Social Security benefits aren’t affected, and the trust fund builds up binding IOUs just the same.

Feingold’s Votes

This time, the Club for Growth cites three votes to support its claim. According to Doug Sachtleben, communications director for the Club for Growth, these votes show that “Feingold rejected proposals that would have protected what was then a surplus in the Social Security Trust Fund.”

That’s nonsense. For one thing, failing to protect a surplus is a far cry from “robbing Social Security.” And in fact, none of the votes would have taken a penny from the Social Security trust funds, and none would have cut one cent from promised benefit payments to any current or future beneficiary.

All three votes were actually against symbolic Republican proposals that failed to pass Congress. One of them was a Republican bill to reduce the debt limit — offered by the GOP at a time that it simultaneously pushed for tax cuts (favored by the Club for Growth) while resisting a Democratic president’s push to spend more to support Social Security.

Here’s what each vote was really about:

  • Senate Vote 90 on April 22, 1999:
    This was during Bill Clinton’s presidency, at a time when Congress was debating what to do with annual federal budget surpluses that were being generated.
    Clinton had just proposed in his State of the Union address to “invest the surplus to save Social Security” by committing 60 percent of the projected surpluses over the following 15 years to extending the life of the program. But at the time, Republicans were making a big tax cut their top domestic priority, and they commanded majorities in both the House and Senate. They eventually approved a measure to devote most of the projected overall budget surplus to a $729 billion tax cut, a bill that Clinton vetoed.
    To counter Clinton’s proposal to put more money into Social Security, Republicans instead  proposed a “lockbox” amendment (Amendment number 254) with the stated intent of ensuring “that social security surpluses are used for social security reform or to reduce debt held by the public and are not spent on other programs.” But that measure provided no new funds to Social Security. At its core was a formula to cut the federal debt limit each year, tied to the amount of any surplus of income from payroll taxes over the cost of Social Security benefits.  Clinton’s Office of Management and Budget denounced the GOP “lockbox” amendment as a smokescreen, saying that it actually would “put payment of Social Security benefits at risk” by imposing progressively lower limits on the government’s  ability to borrow from the public, raising a threat of “periodic debt crises.”  OMB said the president’s senior advisers would recommend a veto, should the GOP “lockbox” pass.
    Although Republicans had a 55 to 45 majority in the Senate, they couldn’t muster the 60 votes required to break a Democratic filibuster against the measure. A cloture motion to end debate and bring the measure to a vote failed 54 to 45, with a lone Republican, William Roth of Delaware, crossing party lines and voting against cloture.
  • Senate vote 68 on March 16, 2006:
    This time Republican George W. Bush was in his second term as president. The Senate was again controlled by Republicans, and the federal government had run up several years of deficits totaling hundreds of billions of dollars annually.
    Republican Sen. Jim DeMint of South Carolina proposed an amendment to the annual, non-binding budget bill that he said (page S2263) “creates a budget mechanism to allow Congress to consider ways to begin saving the Social Security surplus.” But the amendment would not by itself have made any changes in the program.
    DeMint’s amendment, however, also envisioned “providing the option to voluntarily obtain legally binding ownership of at least some portion of each participant’s benefits” should any changes be made to Social Security. During a very brief debate, Democratic Sen. Max Baucus of Montana said: “This is privatization of Social Security, pure and simple.”
    The Senate rejected the amendment 53 to 46, with eight Republicans breaking party ranks to join Feingold and other Democrats to defeat the proposal.
  • Senate vote 89 on March 22, 2007:
    DeMint tried again to amend the next year’s budget bill, this time changing the wording to refer to accounts “providing participants with the benefits of savings and investment.” But by this time Democrats held a tenuous Senate majority, and results were similar.
    Baucus said (page S3560) “It looks good on the surface, but this is an amendment to privatize Social Security, create private accounts for Social Security. Senators should not be fooled.” Senators rejected the amendment 45 to 52, with four Republicans crossing party lines to oppose it.

The Vanished Surplus

Worth noting is that the Social Security surplus that gave rise to years of partisan sniping has now disappeared, not because the trust fund was “raided” or “robbed” but because more people are retiring and drawing benefits. The cost of those benefits now exceeds the payroll tax revenues that go into the two Social Security trust funds (one for retirees and one for the disabled).

As we noted some time ago, the combined trust funds reached a tipping point in 2010, when they began running a primary deficit (exclusive of interest paid into the funds from general revenues) rather than a surplus.  According to the most recent accounting from the nonpartisan Congressional Budget Office, the trust funds ran a combined primary deficit of $73 billion in fiscal 2014, a figure projected to rise to $78 billion in the current fiscal year, which ends at the end of this month.

Back when there were surpluses, they weren’t really diverted, but were duly invested in interest-bearing Treasury securities as required by law.  Even accounting for those interest payments, however, the combined trust funds will be depleted entirely in 2034, according to the latest report of the system’s trustees.  At that point, the system would have only enough income to provide 79 percent of promised benefits, the trustees said.

The basic cause is demographic: In 1960 there were five workers paying payroll taxes for every Social Security beneficiary. That was down to fewer than three workers last year, and is projected to decline to 2.2 workers per beneficiary in 2030.

So now there is no longer any surplus to “raid” or “rob.” But, as we said in 2006, no matter how often this tired old line is exposed as false, nothing seems to deter political functionaries from inflicting it on voters, again and again.

-Brooks Jackson