The Myths about the Myths of Social Security

By | July 29, 2010

For decades we’ve all known the Social Security was in trouble. No more!!  MoveOn.org has calmed the waters and published the truth – all while using an absolute fiction.

This post at the liberal site attempts to convince its readers that there is nothing wrong with Social Security – move on folks, nothing to see here:

Myth: Social Security is going broke.

Reality: There is no Social Security crisis. By 2023, Social Security will have a $4.3 trillion surplus (yes, trillion with a ‘T’). It can pay out all scheduled benefits for the next quarter-century with no changes whatsoever.1 After 2037, it’ll still be able to pay out 75% of scheduled benefits–and again, that’s without any changes. The program started preparing for the Baby Boomers retirement decades ago.2 Anyone who insists Social Security is broke probably wants to break it themselves.

The source of footnote “1” is… yup, another liberally-slanted “news” site, new deal 2.0. To refute this myth about a myth, I submit – The 2009 Annual Report of the Board of  Trustees of the Federal Old-Age and Survivors  Insurance and Federal Disability Insurance Trust Fund (that’s the original name for the Social Security Trust Fund):

Under the long-range intermediate assumptions, annual cost will begin to exceed tax income in 2016 for the combined OASDI Trust Funds.

That just means they’ll dig into their piggy bank right?  Well, that piggy bank is not cash or any other easily liquid assets (stocks, money market funds, etc) – it’s government bonds.  In the event of Social Security running a deficit, they will have to cash in their government bonds, and their holdings aren’t small.  One must also realize that in order for the government to pay those bonds, they will have raise taxes, cut spending or both.  The exact same thing as if dealing with a deficit crisis.

I am not sure how they even throw this next one out with a straight face .. but hey, job security for me.

Myth: We have to raise the retirement age because people are living longer.

Reality: This is red-herring to trick you into agreeing to benefit cuts. Retirees are living about the same amount of time as they were in the 1930s. The reason average life expectancy is higher is mostly because many fewer people die as children than did 70 years ago.3 What’s more, what gains there have been are distributed very unevenly–since 1972, life expectancy increased by 6.5 years for workers in the top half of the income brackets, but by less than 2 years for those in the bottom half.4But those intent on cutting Social Security love this argument because raising the retirement age is the same as an across-the-board benefit cut.

Checking the footnote source “3” .. The Center for Economic and Policy Research – A progressive economic “think-tank”.  Wow, what right-wing nut job counter-source will I use… uh, I know!  That whacked-out tea party infested non-partisan .. Congressional Budget Office :

Once the baby-boom generation retires, the portion of the nation’s output that the federal government will spend on Social Security will increase by more than 50 percent–from 4.2 percent of gross domestic product (GDP) in fiscal year 2001 to an estimated 6.5 percent in 2030.<

This is just too easy.
Next up… a statement that is only true if you believe the first two falicies:

Myth: Benefit cuts are the only way to fix Social Security.

Reality: Social Security doesn’t need to be fixed. But if we want to strengthen it, here’s a better way: Make the rich pay their fair share. If the very rich paid taxes on all of their income, Social Security would be sustainable for decades to come.5 Right now, high earners only pay Social Security taxes on the first $106,000 of their income.6 But conservatives insist benefit cuts are the only way because they want to protect the super-rich from paying their fair share.

But heck, this has been so fun, let’s see who this source “5” is.  The Economic Policy Institute which has a board of directors listing that reads like a collection of union leadership, socialists,and at a minimum heavily left-leaning academicians.

  • Andy Stern – SEIU Founder
  • Linda Sanchez (D-CA 39)
  • Ed Mcelroy – American Federation of Teachers
  • Ron Gettlefinger – United Auto Workers
  • R. Thomas Buffenbarger, Internation Association of Machinists & Allied Workers
  • Anna Burger, SEIU and “Change to Win” (Organized labor group)

I could go on, but you get the point, another progressive site sourced as if it’s a balanced credible source.

Next up, something we’ve all known for decades:

Myth: The Social Security Trust Fund has been raided and is full of IOUs

Reality: Not even close to true. The Social Security Trust Fund isn’t full of IOUs, it’s full of U.S. Treasury Bonds. And those bonds are backed by the full faith and credit of the United States.7 The reason Social Security holds only treasury bonds is the same reason many Americans do: The federal government has never missed a single interest payment on its debts. President Bush wanted to put Social Security funds in the stock market–which would have been disastrous–but luckily, he failed. So the trillions of dollars in the Social Security Trust Fund, which are separate from the regular budget, are as safe as can be.

I cringe at the thought, but yeah.. lemme go check this apparently omnipotent, clarifying and surely factual source.  Hey look, it’s Andy Stern and his union cronies at Economic Policy Institute again.  Now why would organized labor have an interest in Americans feeling secure about Social Security and also getting the rich to put more in than they will ever get out?  Probably because his union workers are going to get the shaft when they realize how badly unions have under-funded their pensions.  If the government can’t bail him out.. he’s looking at the collapse of organized labor.  Now to debunking the myth.. uh check the commentary under the first myth and the next one.. this is just a chain of lies where you tear down one and rest fall upon the weak foundation that first lie set.

I hope I don’t even have to post a rebuttal to this one, because if you’ve understood the rest of the article, it’s unnecessary:

Myth: Social Security adds to the deficit

Reality: It’s not just wrong — it’s impossible! By law, Social Security funds are separate from the budget, and it must pay its own way. That means that Social Security can’t add one penny to the deficit.1

The source, New Deal 2.0 .. again.  As if the actual “New Deal” hasn’t actually perpetuated a deficit crisis, the new version is trying to say that not only did Social Security not cause the issue, it’s actually not even possible.  The first rebuttal should give you enough, but if not.. lemme try again.  During years of excess, the Social Security trust fund does not get to hang on to its excesses.  It has to put that money into government bonds and hold those instead.  Should they run into deficit, they will call on the government to give them cash for the bonds.  Since our government doesn’t have any free cash due to deficit spending… they’ll have to borrow money from somewhere else, raise taxes or cut spending – exactly the same actions as excessive debt.  Because the trust fund gave the government money and it received bonds in return, it holds debt of the U.S. government (I said debt right?).  The treasury got money from someone on a loan basis to cover costs it cannot fund on its own.  Most of us call that operating at a deficit.  Social Security absolutely enables our government’s deficit spending and if they call on the money in those IOUs, it will just get tacked-on.

So MoveOn.org posts an article based on the facts of union-run, far-left, liberal nut-job organizations – gave me something to do, but could really have used a challenge.

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0 thoughts on “The Myths about the Myths of Social Security

  1. D R

    “Should [Social Security] run into deficit, they will call on the government to give them cash for the bonds”

    Really? Are you kidding me? What a topsy-turvy world we live in! Social Security gets to to be paid back the loans it made to the government?

    You mean, like Bill Gates, Warren Buffett, Pete Peterson…