It's disappointing when the AP's economics writer gets some basic facts wrong in his Social Security wire story
. I've e-mailed these corrections to the writer, but some damage has been done.
Just in case AP fails to issue a new story, read on to learn about the major factual problems....
- Headline writer gets it wrong. The current headline is "Trustees: Social Security Broke in 2041." The article itself says otherwise. In 2041, the trustees forecast that the Social Security Trust Fund will go broke. At that point Social Security will live paycheck-to-paycheck -- just like the vast majority of Americans who are not "broke."
- Economics writer can't do basic math. He writes:
Equally important are when benefits paid to the elderly start exceeding the payroll taxes designated to support the two programs. That's when the government will have to increase its borrowing on financial markets, raise taxes or divert money from other government programs to sustain Medicare and Social Security at current levels.
The second sentence simply isn't true. The Social Security surplus varies every fiscal year and will tend to shrink over the next several years. If the Social Security surplus changes every year, then its effect on the rest of the federal budget also changes every year. For example, in 2005 if Social Security takes in 50 bucks and pays out 40 bucks in benefits, it's buying 10 bucks in bonds -- 10 bucks that goes to defense, national parks, interstate highways, whatever. Then suppose in 2006 that Social Security takes in 51 bucks in payroll taxes but pays out 42 bucks in benefits. That's a surplus of 9, which means the rest of the government gets a dollar less to spend, and so the rest of government must raise taxes, reduce spending, or borrow more -- the very next year!
That's why reducing the non-Social Security federal budget deficit is the best way to assure Social Security's long-term solvency. Social Security isn't the problem -- it's in surplus, after all. It's the rest of the budget.
- Snowed in. The AP writer identifies Bush Administration Treasury Secretary John Snow as simply "Snow." Readers never learn who "Snow" is. (That's fitting, because the Bush Administration is snowing all of us.)
- A tax increase is...a tax increase. AP says:
Bush has said he will not raise payroll taxes to deal with the funding problem although he has left the door open to raising the $90,000 cap on incomes subject to the payroll tax.
So let's suppose you are fortunate enough to earn $95,000. If the cap on income eligible for the payroll tax goes up, do you think that's not a tax increase? Of course it is. Right now, here's the tax schedule:
- 12.4% on income below $90,000
- 0.0% on income above $90,000
Bush is not opposed to this tax increase
- 12.4% on income below $90,000
- (something > 0)% on income above $90,000
- (something >= 0)% on income above (something > $90,000)
My friends, that's a tax increase. Doesn't necessarily mean it's bad
-- personally I think Democrats should advocate a lower uncapped tax rate at the politically opportune time -- but it is an increase.
What the AP writer should have said was simply this: "President Bush has left the door open to increasing the tax rate on workers earning more than $90,000."
5. Is Thomas Saving a "public trustee"? That's a strange term for him. What the AP writer should have said was that Saving is "publicly pro-privatization," but I'll take the factual and neutral "non-Cabinet trustee" instead. ("Public" suggests he represents the public. The AP writer has no evidence of that, and there's a rather large amount of evidence on the other side.)
You can write the AP (subject to the attention of the writer and/or the breaking news desk) at email@example.com.