Granny Bird Award: Paul Ryan
Yesterday, I examined his proposed cuts to the safety net, with an emphasis on Medicare. Today Granny Bird wants to point out his deceptions and misrepresentations with respect to Social Security. Michael Hiltzik quite nicely assists in that endeavor:
...what concerns us here is his description of the Social Security trust fund, which currently holds close to $3 trillion in U.S. Treasury bonds, all purchased with payroll tax income paid by working men and women since 1983.
The idea of building up this trust fund was to bank excess tax revenues against the looming wave of baby boomer retirements, which has now begun. But the trust fund is still growing, because Social Security's income streams--the payroll tax, interest on its bonds, and revenues from income taxation of benefits--still are sufficient to cover current benefits, and then some.
Ryan wants you to think different. Here's the passage in question, from page 66 of his plan.
"Any value in the balances in the Social Security Trust Fund is derived from dubious government accounting. The trust fund is not a real savings account. From 1983 to 2010, it collected more Social Security taxes than it paid out in Social Security benefits. But the government borrowed all of these surpluses and spent them on other government programs unrelated to Social Security. The Trust Fund holds Treasury securities, but the ability to redeem these securities is completely dependent on the Treasury’s ability to raise money through taxes or borrowing." ...
...The money has been invested in U.S. Treasury securities, just as you might do by purchasing Series EE savings bonds, or TIPS. Why do people invest in T-bonds? Because they're the safest securities in the world. The U.S. has never, ever defaulted on them (although the Tea Party wing of the GOP seems to think that would be a good idea). The money isn't invested in corporate securities or anything else, because Congress hasn't allowed that.
The Social Security trust fund's bonds are backed by exactly the same commitment of the U.S.' "full faith and credit" as any other Treasury security. Keep your eye on that ball, because Ryan is going to try to palm it.
When one buys a T-bond, one is effectively lending the money to the government, which then uses it to do things. So, yes, Ryan is correct in stating that "the government borrowed all of these surpluses and spent them on other government programs unrelated to Social Security."
Right. On national defense. Two wars. Construction of roads, school buildings, courthouses. On the salaries of congressmen like Rep. Ryan. What of it?
Was this money wasted? Hardly. The U.S. economy has more than doubled in size (adjusted for inflation) over that time, in significant part because of the infrastructure and services provided by government--including with that borrowed money.
...there's no "dubious government accounting" involved here--the dubious accounting is all Ryan's.
The trust fund is indeed a real savings account, involving deposits and interest. Yes, the government borrowed the money, and it has paid interest on it every year (duly recorded and published, down to the last dollar, in the annual reports of the Social Security trustees).
And yes, "the ability to redeem these securities is completely dependent on the Treasury’s ability to raise money through taxes or borrowing." What Ryan doesn't say is that the Treasury's ability to raise taxes and borrowing is effectively unlimited.
The most important factor is the one that people like Ryan want you to forget: The money in the Social Security trust fund came directly or indirectly from the payroll taxes paid by millions of American workers--100% of it. It was paid by workers in the trust that the government would pay it back. Paul Ryan is hinting, pretty strongly, that he doesn't want to pay it back. [Emphasis added]
I quoted the column extensively because Hiltzik's argument required it and I'd recommend you read it all. His point (and mine) is that Ryan and his rich benefactors would be happier if we took our money and paid it into Wall Street brokers' hands. And once we do that, we should just die.
Paul Ryan never met a rich campaign donor he didn't like and a "taker" elder he did.
How long, O Lord. How Long.