"I cannot guarantee that those checks go out on August 3rd," President Obama warned CBS Evening News viewers about Social Security Tuesday night. "There may simply not be the money in the coffers to do it." But how can that be? Haven't Washington's professional politicians been telling us for decades that Social Security is in no danger of bankruptcy because of those trillions of dollars supposedly just sitting there in the Social Security Trust Fund? Why can't Obama use the money in the trust fund to cover the Social Security checks due to be sent out Aug. 3?See also Allahpundit: "If default would be a catastrophe, why is Obama opposed to a short-term deal that would avert it?", and Charles Krauthammer: "He’s been saying forever that he’s prepared to discuss, engage, converse about entitlement cuts. But never once has he publicly proposed a single structural change to any entitlement."
The reality is that the Social Security Trust Fund is, and always has been, an accounting fiction. For almost all of Social Security's history, the amount of money the program received from payroll taxes has exceeded the amount of money it paid out in benefits. The excess revenues, by law, are "invested" in special-issue, nonmarketable Treasury bonds. These bonds are marked on the government's balance sheet as "assets" of the Social Security program, but they are also counted as debts owed by the U.S. government. In fact, $2.6 trillion of our $14.3 trillion debt consists of bonds owed to the Social Security Trust Fund. . .
So will the U.S. Treasury have enough money to cover Social Security checks that are supposed to go out Aug. 3? American taxpayers will dispatch an estimated $200 billion to the Treasury in August. Instead of scaring millions of American seniors, Obama could simply instruct his Treasury secretary to pay Social Security benefits from that $200 billion. But Obama won't do that because he would rather use the prospect of no Social Security checks to scare seniors into pressuring Republicans to raise taxes. There is a word for that: demagoguery.
Wednesday, July 20, 2011
A July 15th Washington Examiner editorial: