Jeff Jacoby’s wretched column in Sunday’s Boston Globe is an excellent example of the depths to which those who seek to destroy social security will sink in their effort to mislead the public into thinking (a) that social security is in crisis, and (b) that President Bush’s plan will do anything about it.
The column, entitled "An eighth of every paycheck," would lead (and is undoubtedly designed to lead) an intelligent but relatively uninformed reader to the following conclusions, all of which are false (follow the links to see why):
- Americans pay one eighth of their first $90,000 of income to social security. (False, unless you’re one of the relatively few Americans who is self-employed.)
- Social security is headed for a financial disaster in roughly 15 years that will result in it running out of money ("bankrupt") and not being able to pay benefits unless Congress takes drastic action. (False.)
- President Bush’s
privatization"personal accounts" plan will help solve social security’s financial problems. (False.)
Now, if you read the column very carefully, you will see that Jacoby never actually says any of these things. And that is because each of them is demonstrably false — as Jacoby well knows. So if Jacoby actually said any of those things, he would be promptly called a liar and fired from his job. But this column is one of the best examples I’ve seen of trying really, really hard to lead a reader to a false conclusion without actually making any demonstrably false statements.
The column is disgraceful propaganda that the Globe never should have published. Columnists are entitled to their opinions, but no newspaper should be publishing material that is intentionally misleading. I have written a letter to the editor and to the Globe’s ombudsman about this column, and I’ll update this post if I hear anything back from them.
jrp says
1) Um…so, you’re trying to assert that Jacoby is lying because the company pays half of the SS instead of you? As if, somehow, the company forgets to count their part of the SS contribution as part of your benefits when it contemplates how much they have to pay you to work for them? Or whether it’s worth hiring you versus how much work you can do for them? And instead – what? Every corporate accountant everywhere just wakes up on tax day, slaps their collective heads and goes ‘oops! I guess we’ll just have to give the government more money than we thought’?Obviously not. “Employer contributions to SS”, like all the other “benefits” than you get that you probably don’t appreciate, are directly subtracted from what they would otherwise pay you directly. They don’t care if they give the money to you, or if they give the money to the government on your behalf – it still comes out of their pocket.2) Okay, since you’ve put up this same canard several times: can you explain to your readers what the ‘social security trust fund(s)’ presently consists of?I’ll tell you, instead of making you do the work: This year’s FICA and SECA receipts + lots of promissary notes against future tax revenues (aka treasury bond-like securities).The money behind those treasury bonds (which is the excess money taken as SS taxes since forever, over total SS outlays) is (wait for it)…spent by the government in the normal course of business! So they stick a piece of paper in the SS Trust Fund, and take that money and buy whatever with it. (This money is is counted as part of the total federal deficit.)The INSTANT the amount of SS benefits paid out exceed SS tax revenues, they musta) DECREASE benefits so it doesn’t exceed the revenues (I will add ‘inflate the money supply’ here, which will work out to be the same thing with worse side effects)b) or INCREASE the social security tax so it doesn’t exceed the revenuesc) or INCREASE other taxes (or cut spending) to cover the additional outlayd) OR go into more debt, but this time to a third party (i.e. sell bonds to Saudi Arabia or someplace) to cover the outlay. This last is like borrowing money on your credit card to pay for your mortgage – it’s stupid and will catch up to you eventually – usually when they stop giving you credit and you go totally bankrupt.This happens in 2018 (give or take a year). Yes, it’s not ‘bankrupt’ at this point: but the money has to come from somewhere. So, they the Governemnt has to start ‘paying back the debt with interest’ – right out of general taxes – i.e., out of your pocket and my pocket and whoever else is working’s pocket.Why is this so hard for you to grasp that in 2018 is when things will start to go to hell in a handbasket, and we have to act before then.3) I don’t believe the claim is that private accounts alone will ‘save’ social security. But some combination of increasing benefits with inflation rather than (as now) based on salaries, plus private accounts will make the plan survivable for a much longer period. They will also provide a cushion for young people against future congressional depredations on the ‘trust fund’, by not allowing congress to control the revenue.Oh, and by putting money into the capital markets (where it can do more work) rather than giving it to the government (where it will do less work) also makes the economy grow faster and brings us better, faster, cheaper products that we want. It’s called the free market – it’s a good thing.Now, the 2-4 trillion dollar transition cost can very much be likened to remortgaging your house and paying the ‘points’ up front. Yes, it’s expensive, but it generally works out in your favor in the long term. Also, that transition costs seems like a lot now, but if we can continue to increase the GDP, it will amoratize nicely. For instance, had we done this 20 years ago, the transition costs would be very small, even though half a trillion dollars seemed like a lot back in the mid-80s. If we wait another 10 years, the transition costs will be much more expensive as a percentage of GDP than they are now and would need to be amoratized over a much smaller period.None of this is rocket science, I fail to see what the problem the left has with it is. It’s not like Bill Clinton, Teddy Kennedy, JFK, and a whole raft of Democrats weren’t clamoring something needed to be done to ‘save social security’ 10 years ago. All of a suddent, just because the Republicans want to actually do it, they stop claiming there are any problems? I call shennanigans.
david says
jrp says
“The fact is that when the treasury has to pay up, it will probably borrow – just like it does every other time t-bills come due.”Again, borrowing for an entitlement is like paying for your mortgage with a credit card. It doesn’t work in the long term. Who pays up when that bill comes due? And, in the meantime, who services the interest on the debt? You and I, and our posterity, with taxes out of the general fund. (Well, I do, I don’t know about you. You might have a mortgage and write-offs. Aside from charitable giving, I don’t.)The only people who benefit from what you advocate is the “international banker conspiracy”. Whoever that is. But, in reality, what it does is causes inflation and wrecks the economy’s money supply balance.Ultimately, it all comes out of the pockets of the people who are making money. So, doing nothing is advocating making our children and grandchildren foot the bill for our retirement entitlement. But, given the declining worker-per-retiree, that burden goes up significantly (from 5 now to 3 by 2025).The private account plan has the effect of making the bill that our children have to pay smaller through a decrease in entitlement as time goes on, which is replaced by a return on the capital markets.In the meantime, the money that would otherwise be spent by the government gets put into the market, which in turn gives us better products and services.Again, I fail to see why this is hard to grasp.Norquist went off the rails a long time ago, and he’s not driving anything. Also, you fail to mention that even FDR expected Social Security to get privatized within 30 years of its inception.
david says
It seems to me that your concern is not so much social security itself as the larger fact that the US government has to borrow a lot of money to meet its obligations because more is going out than is coming in. That’s called the deficit. And whose fault is it that we have a huge and burgeoning deficit with no end in sight? Oh yeah….