Ah Media Bias
Is the liberal media killing Social Security privatization?
Russ Mitchell of CBS Evening News wouldn't even give the president credit for facts that are indisputable. According to Mitchell, "Mr. Bush said he's open to any good idea to fix a system he claims is heading for bankruptcy." Bush doesn't have to "claim" the system is going bankrupt. According to the Social Security Administration trustees, benefits paid to retirees will exceed payroll taxes collected by 2017. By 2041 the system will be totally broke.Of course, I'm not happy with that kind of reporting either. Every time the President gives a speech claiming the system is heading for bankruptcy, I'd like to see news services report, "Speaking today in Canton, Ohio, the President repeated his misleading claim that Social Security is headed for bankruptcy. In fact, even after Social Security's trust fund is exhausted (projected by the Social Security administration to happen in 2041, and by the Congressional Budget Office to happen in 2052) tax revenues will suffice to pay seventy percent of scheduled benefits."
May 10, 2005 | Permalink
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» Morally Bankrupt? from Asymmetrical Information
Matthew Yglesias repeats a claim I've heard from a lot of people who don't understand the meaning of insolvency: Is the liberal media killing Social Security privatization? Russ Mitchell of CBS Evening News wouldn't even give the president credit for f... [Read More]
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Tracked on May 11, 2005 11:24:02 AM
By Bush's definition, the United States is bankrupt _right now_, as we are running a deficit.
Also, using his definition, we went from surplus to deficit under his watch, so GWB bankrupted us.
Posted by: Matt Neiger | May 10, 2005 11:43:14 PM
Damnit Matt. I was just going to say the same thing. I wish some reporter would ask the president if he considers our nation bankrupt.
Posted by: kj | May 11, 2005 12:15:14 AM
There is no "trust fund"
Posted by: Al | May 11, 2005 12:26:45 AM
Matt, if you could only pay 70% of your bills as they came due, you'd be bankrupt.
Posted by: Thomas | May 11, 2005 12:28:54 AM
Herman Cain, your cliche liberal media rant is, well, tired and cliche. Oh Herman "former president and chairman of Godfather's Pizza, Inc., former senate candidate in Georgia, and former CEO of the National Restaurant Association, [and] now the national chairman of the Media Research Center's Free Market Project[,]" stop focusing on your "former" selves. It's not what you've been that's important, it's what you can become. Think big. Devote your scarce time on earth to a noble purpose. Go back to making the world safe for the Godfather's pizza chain. Return to your roots. I grew up playing Galaxia at a Godfather's pizza joint in south-central Washington state, so I can personally attest to the wholesomeness of the place.
Posted by: fnook | May 11, 2005 12:37:16 AM
no, thomas. the way the system is designed, if when the bills come due, you only have cash flow to support 70% of them, the bills are cut, not something available to Matthew (under normal circumstances).
so no, the system cannot go bankrupt and claiming it can is dishonest and should be labelled as such.
Posted by: howard | May 11, 2005 12:46:19 AM
If Bush doesn't have a specific plan, and coalition to back it up, for strengthening social security, then the question becomes: why should we waste time on social security when healthcare is the more pressing concern for seniors, and the nation?
Rove's genius is in framing the argument.
Bin Laden in Pakistan? Answer: Saddam in Iraq.
Healthcare crisis? Answer: Private Social Security accounts for the kids.
Posted by: epistemology | May 11, 2005 1:07:57 AM
"tax revenues will suffice to pay seventy percent of scheduled benefits"
Hello! If you can only pay 70% of what you owe bankruptcy is hardly a misleading term.
Posted by: Abdul Abulbul Amir | May 11, 2005 1:32:22 AM
Umm no. Bankruptcy is a legal term. You may not have enough money to pay but that doesn't mena your bankrupt. And the governemtn can pay it all if it chooses to. It like saying that the second job you took to pay for your car is not covering the costs and therefore you're broke.
Posted by: Rob | May 11, 2005 1:47:21 AM
If, when your income is cut to 70% of what it was, your bills are reduced to 70% of what they had been, you're not bankrupt.
Posted by: bunny | May 11, 2005 1:48:09 AM
Abdul is right. I have no doubt that Bush is intentionally using the term "bankruptcy" to be misleading. But it's not wrong. If a business can only pay 70% of its obligations, it's bankrupt.
Matt Neiger -- the U.S. is not bankrupt in the same way. If the nation could only afford to pay 70% of its T-bill obligations as they come due, it would be bankrupt.
Still, none of this changes Matt's point, which is 100% right. If most people have a mistaken idea of what "bankruptcy" means, it's the press's job to explain it when reporting on Bush's use of the term.
Posted by: Christopher M | May 11, 2005 1:48:29 AM
The government could change the law in 2041 and, poof, no more SS deficit.
Posted by: Drew | May 11, 2005 1:55:43 AM
If a business can only pay 70% of its obligations, it's bankrupt.
And if the Chinese call in their bonds? I don't mind Bush using the term as long as he talks about the way he's presided over the bankruptcy of the entire US economy.
Posted by: ahem | May 11, 2005 1:59:23 AM
Folks need to get their analogies straight.
Hello! If you can only pay 70% of what you owe bankruptcy is hardly a misleading term.
See, you start out with a giant assumption that is complete bunk.
Say I am a small business owner. I have two divisions. Division 1 costs X and generates revenue Y, while division 2 has a potential, 40 years hence, to cost Z but only generate revenue of 0.70*Z.
Is this situation bankruptcy? Not a fucking chance. Firstly, it just means you have to evaluate division 2 and perhaps shift some funds from division 1, either temporarily, or not, until you raise revenues for division 2, eliminate it, or decide to eat the loss for some reason. Secondly, you have 40 years to avoid this potential problem.
(Further, throw into this mix that currently, division 2 makes 1.2*Z and only costs Z, but division 1 costs X and makes 0.8*X, and you find this situation completely tenable).
Well, that's the SS situation. And Bush chooses to call this bankruptcy.
That is not honest rhetoric by any stretch of the imagination. It's called a lie by people that are honest. And that's what it is.
And it bears repeating, constantly: the US government, under this hokum definition, is bankrupt right now. And George Bush made it that way, with help from his buddies in Congress. And what are they doing about it? They are making sure the situation worsens with yet more tax cuts for the rich.
I forgot to add: if Bush believed his own bullshit about bankrutcy, he would not propose a plan that moved both dates forward. Under Bush's proposed Pozen plan, SS begins to draw from its trust fund in 2011 rather than 2017. It becomes "bankrupt" in 2030 rather than 2041.
So, Bush is trying to convince us that SS is in dire straits: it's going to go bankrupt, folks! Therefore, we *must* implement my plan to bankrupt it 11 years sooner!
Sorry, if you believe Bush and the Republicans are being honest with the
"bankrupt" wording, I've got some land to sell you ...
I don't think that, legally, a government can go bankrupt. It can default, but default and bankruptcy are different things.
Posted by: Julian Elson | May 11, 2005 4:30:48 AM
Are the Bushies liars and looters? Yes. Are the US media their accomplices? Yes. Are Al and Abdul here their useful idiots? Sure.
What else is new?
Posted by: abb1 | May 11, 2005 4:50:31 AM
Mounds of ignorance. You are not bankrupt if your revenues are fully capable of paying everything you are legally obligated to pay. Under current law Social Security is authorized and required to lower benefit checks to the level allowed under then current income. The Social Security owes me full benefits right up until the time the Trust Fund hits zero and not a day further. If that means a cutback to 74% of a better scheduled benefit than the one I would get if it was fully funded well then I guess I will miss that portion of the check in 2041, but Social Security will not be "bankrupt". The legal case just falls to pieces.
Which in the final analysis is the beauty of Social Security and why it is going to be a brick shoved up Republicans' asses sideways. It is not their money. The program was set up so that workers bore the entire burden and so earned the total reward if any. If it goes broke Capital has made no legal promise to bail it out, if it is solvent Capital has no moral claim to tap its surplus.
For a generation the debate has been framed as one where Capital, here personified by Young Risktakers, will have to bail out (or not) Workers, here personified by Lazy Elderly workers sucking out the wealth via the dread Inter-Generational Income Transfer Portal. Well the numbers have moved. Boomers are fully paid up to 2041 when the very youngest of us are 77 (born in 1964) and the oldest 95 (born in 1946). Only if people born after 1964 are too lazy to make the economy grow at more that 2.1% is there any problem at all.
Boomers are not the problem. We stepped up to the plate, paid the extra taxes since 1983 and deserve every single penny of every single retirement check right up until 2041 even if younger workers screw up the economy so bad it performs down to Intermediate Cost's numbers. Which it won't, because the numbers are ridiculous.
Boomers paid their own freight, we are willing to accept the tiny risk of a minor cut to our check come 2041 because one) most of us will be dead and two) we will not leave this country and this world in such shitty shape that you will not be able to afford to pay,
This whole debate had a whole different feel when the Trust Fund was supposed to be depleted in 2023. Boomers were faced with coming hat in hand to their kids and begging them to bail us out, once the peak years of the Boom (me - 1957) started retiring. Well now the Trust Fund is funded to 2041, farther out even given sharply reduced growth, and Boomers are in the position of "Don't make me get out of this chair!"
Boomers didn't break Social Security. Our numbers put it at risk and so we stepped up to the plate. Now Bush/Pozen want to call Reagan a liar and start stomping on our benefits even before we start to draw them. Well like Reagan "I paid for this microphone" and young people can just get off their asses and start growing the economy over and beyond 2.1%. Admittedly the "slacker" stereotypes tagged on Gen-X were not entirely fair, on the other hand we are not calling you to meet our parents charge to spend "blood, sweat, toil and tears". Get out of bed, show up for work and Social Security is fully funded for my lifetime and yours.
Did I mention that Boomers are getting cranky at taking the fall for all this?
And that only half of us were screwed up by the Sixties "New Math". Lots of us can still add and subtract - and a good number can extrapolate.
Bankrupcy is the wrong term. But the 'trust fund' doesn't matter a bit. The problem does not arrive suddenly in the distant future when the 'trust fund' is exhausted, but rather gradually in the near future as SS stops compensating for the deficit in the rest of the budget and then, as the 'break even point' is crossed, actually starts contributing to the deficit (as general tax revenues have to be redirected to make up for social security shortfalls). This pain will not be reduced in the slightest by the 'trust fund'. And MY, being a bright guy, has to know this.
The 'there's no reason to worry because the trust fund will last for decades' argument is far more disingenuous than anything Bush is peddling. It appears it will probably turn out to be effective demagoguery, but it's BS just the same.
Posted by: mw | May 11, 2005 7:45:25 AM
Um mw--nope. Wrong again! No tax revenues need be diverted to pay for the Trust Fund. Just a reissue of retiring debt. If mw was a bright guy he'd know this, but he is not.
Posted by: Rob | May 11, 2005 8:21:42 AM
"Hello! If you can only pay 70% of what you owe bankruptcy is hardly a misleading term."
Evidently, you are not familiar with the provisions of the new bankruptcy law congeress just passed . . .
Posted by: rea | May 11, 2005 8:26:44 AM
Is this bankruptcy? Payouts are dropping roughly 50%.
"The 'there's no reason to worry because the trust fund will last for decades' argument is far more disingenuous than anything Bush is peddling. It appears it will probably turn out to be effective demagoguery, but it's BS just the same.
Nonsense. The whole point of this line of reasoning is to point out problems that are more serious than social security's troubles. The fact that Social Security will soon no longer be able to supplement the general fund is not a problem of Social Security, it is a problem of the general fund.
The shortfalls in the general fund and in medicare are much more pressing and serious than any problems with Social Security. Harping on Social Security is demagoguery designed to divert attention from the problems of the general fund.
Posted by: Njorl | May 11, 2005 9:46:22 AM
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