Right now CNN has up a front-page "Election 2008 Issues" article that lies about Social Security, from the title to the first line to the very end. This is part of a concerted right wing campaign, including a not-coincidentally-just-released film "IOUSA", financially backed by a right wing think tank, to use the phony "crisis" in Social Security as an election gimmick.
The article features comments by right-wingers and "reformers" and not a single cite to experts, like economist Paul Krugman, who - accurately - claim that there is no crisis whatsoever. Since CNN doesn't allow comments in response to the story, I'm calling CNN on the lies in its story here.
Here's the link to the CNN article entiteld The only way to fix Social Security
by Jeanne Sahadi, CNNMoney.com senior writer.
Notice that the very headline itself assumes the conclusion: Social Security needs "fixing", a point that has never been proven, and is in fact false.
The lies continue from the very first line of the article:
John McCain and Barack Obama both talk about how they would put Social Security on sound financial footing.
The program will face the first signs of a financial crunch within a decade and have to rely on Uncle Sam - who's in hock already - to make up for the shortfall.
This is a lie. The Social Security trust fund is presently running a huge surplus. It is the general fund, paid for by (you know, billionaires') income taxes that is facing the problem. NOwhere does the article point out that it is the general fund, and not the Social Security trust fund, that is in long-term trouble.
The article continues with the contention that:
Social Security is projected to start taking in less tax revenue than it has promised to pay out by 2017 because Baby Boomers will have retired in droves. By 2041, the system will only be able to pay out an estimated 78% of promised benefits.
Answer: Let's imagine you are a couple retiring at age 65. You have saved a nest egg of $1 million. You anticipate continued income of $40,000 a year, and will draw $10,000 a year from your nest-egg to continue to live in the lifestyle you want.
Are you in crisis? Of course not! You could withdraw $10,000 a year from your nest egg for 100 years before going broke! But that is exactly the situation with Social Security, and CNN states as a fact that the system is in crisis.
That's exactly what Social Security is doing. At some point -- and it is more likely to be about 2030 than 2017, Social Security will withdraw from its trust fund -- it's nest egg -- to pay out baby boomers' benefits, exactly as it was designed to do.
In fact almost every single year for the past decade, the year in which the Social Security trust fund will start to pay out more than it takes in has also been set back: in 1996 is was 2019 , by 2000 it was 2024 , and in 2004 it was 2028. In other words, every year the deficit and exhaustion dates get put back by an even longer time period: i.e., to an infinitely receding, never-arriving horizon.
The claim that only 78% of benefits will be able to be paid by 2041 is also tortured and misleadling. Scheduled benefits for 2041 are set to be 160% of 2007 benefits in real terms, the cut if it happens, and it probably won't, means a 25% cut from that level, which as Prof Rosser of JMU points out yields the equation 25% of 160% = 120%. So 'crisis' in context means a 20% better real check for 2042 retiree than your mom gets today, and all the bias is to the upside. Grow the economy at 2.5% and the problem gets postponed for decades, grow it at 3.0% and it vanishes altogether.
In fact, as this graph shows, by the most likely revenue stream (numbered "I" below, the system accumulates ever more reaserves right up to the end of the 21st century:
The article continues with another favorite right-wing sleight-of-hand:
Despite a revenue shortfall, full benefits are expected to be paid out between 2017 and 2041. The system will draw on its trust fund, a collection of special-issue bonds from the government, which borrowed prodigiously from the program's surplus over the years.
But since the country is already running a deficit, the government will have to borrow more money to pay back its debt to Social Security. That's a little like giving with one hand and taking away with the other.
Answer: So why is is it social security that is in crisis, and not the general government fund? Maybe because of all of those "supply-side" tax breaks for billionaires the GOP has been spouting?
Next, CNN echoes the right-wing propoganda of "IOUSA" and quotes from one of its right-wing financial backers:
Add the trust fund bonds to the system's projected 75-year revenue hole and the government will have to come up with a way to address a shortfall approaching $7 trillion, according to David Walker, president of the Peter G. Peterson Foundation and former head of the U.S. Government Accountability Office.
Reform proponents say if the next president is serious about fixing the system he should act fast. "Delay will only make the changes ultimately needed ... less attractive, more painful and more precipitous," according to a statement earlier this month from the American Academy of Actuaries.
Measuring the shortfall
....If implemented, however, Obama's idea would only take care of a small part of the problem. Since the tax hike wouldn't go into effect for 10 years, how much money it's likely to raise depends heavily on future economic growth. But if the hike were implemented today, it would raise $396 billion over 10 years, according to the Tax Policy Center.
"Obama's proposal is only a down payment on the bigger reforms needed to bring the system into fiscal balance," said Roberton Williams, principal research associate at the Tax Policy Center.
Indeed, Gebhardtsbauer said, "they'll need other fixes."
Answer: Once again, it is the general tax fund, and not Social Security, that will face a shortfall. The right-wingers want Social Security to vanish so that the billionaires won't have to give up their general fund tax cuts. The claim also tries to scare people with a "$7 trillion" shortfall, which not only is patently false per the most likely revenue trends as set forth by the government's own watchdog, but assumes that all future Social Security obligations must be paid out of present assets, ignoring that we have a $14 trillion/year economy. In other words, that "$7 trillion" really has to be paid out of a GDP stream of perhaps $1000 trillion over the same time period.
Finally, the article assumes that the only changes available are those to Social Security itself:
Range of fixes on tap
There's a grab-bag to choose from. Reductions on the benefit side include increasing the age at which a retiree can collect full benefits....
Other options include changing the formula by which growth in benefits is calculated for current workers or how the annual cost-of-living adjustments are made to benefits.
On the tax side, lawmakers could increase the amount of income subject to the payroll tax that funds Social Security.
Answer: Did you notice the one "fix" that isn't on the table? Suppose our 65 year old retiring couple have a cousin Stanley ("in debt up to my eyeballs")Johnson who has borrowed $100.000 from them. Our crisis-mongers say that our retired couple must make adjustments in their plans because they don't have that $100,000.
But of course there is another option: cousin Stanley Johnson could pay back the loan! Duh! And exactly so, the general fund can pay back its loans from the Social Security trust fund. But since that would require raising taxes on billionaires, our "reformers" never mention it.
The right-wing lies never go away. It is reprehensible when traditional mass media repeat them as fact, and never allow for so much as a factual rebuttal in their allegedly "even handed" election issue essays.
For a further discussion of the Social Security issue, see my previous diary, The Truth about Social Security.