Social Security: Steve Forbes Stealing Pooh’s Pot of Honey

Robert Reich was on CNN trying his best to rebut the disinformation from Steve Forbes as Wolf Blitzer proved him to be a rather biased referee in the duel. Forbes kept repeated the 2018 date as if the alleged Social Security crisis was just over a decade away:

STEVE FORBES, FORMER PRESIDENTIAL CANDIDATE: I think the president gets credit for facing up to the fact that Social Security will be paying out more than it takes in in the next 10 or 12 years. 2018, 2019, the system’s going to start paying out more money. So why not fix it now when it’s relatively easy? And as for private accounts, personalized accounts, that means the money’s invested in the economy, and that guarantees a stronger economy in the future. All you have to do, Wolf, is look at Europe, where they allowed their welfare system to go out of control, and you see they have much lower growth rates than what we should have in the future. So fix it now before it becomes a huge problem 10 or 12 years from now.

BLITZER: Robert Reich, in 1998, your former boss, the president of the United States, at that time Bill Clinton, also spoke about Social Security, his words, as a looming fiscal crisis. Listen precisely to what he said in ’98.

Reich properly noted that Clinton was concerned that the Republicans would use the Social Security surpluses to fund General Fund deficits, and later tried to challenge this 2018 date:

REICH: Look, first of all, I just want to make sure that those who are listening and heard Steve Forbes — and I have greatest respect for Steve Forbes — I want to make sure people understand these numbers without their eyes glazing over. Steve Forbes said in 2018 or 2019 the system is going to run out of money. But remember…

FORBES: I didn’t say that. It’s going to start to pay out more than it takes in.

REICH: But, Steve, it’s not going to start to pay out more than it takes in. Remember, right now, the Social Security system has a surplus, a big surplus. But the government is using that surplus to reduce the total deficit. The deficit of $413 billion last year would be much larger if you included all of those — if you took away all of the surplus.

So it’s perfectly logical that by 2018 to 2019, when the government, because it used those surpluses on fighting the war in Iraq and everything else, starts to have to deal with the Social Security issue — but that’s only because the government has been using those surpluses to do something else. But let me just say our…

FORBES: The politicians…

BLITZER: Go ahead, Steve Forbes, respond to that.

FORBES: I was going to say, politicians can’t help it. It’s like bears with a pot of honey. They’re going to go into it. And that’s why you need private accounts so politicians can’t put their mitts on the money.

REICH: But the point is that private accounts are going to cost $2 trillion over the next 10 years. You’re diverting money out of Social Security to set up private accounts.


REICH: Social Security is a pay-as-you-go system. And if you divert $2 trillion over the next 10 years out of Social Security, you’re not going to fix Social Security, you’re making it worse.

FORBES: The $2 trillion comes from the public markets. You borrow it, and it’s paid off in the years after that, like a mortgage.

Besides the continual interruptions from Forbes, note his “pot of honey” analogy. Who were those politicians who wanted to rob our retirement funds? Oh yea, Mitch Daniels’ “plenty of money for a tax cut” was eyeing this pot of honey. And Mr. Forbes supported this theft.

But I suspect Winnie the Pooh is a little too smart for Mr. Forbes. Could this caller be Pooh Bear himself:

CALLER: My question is, would Social Security be in such a crisis, supposedly, had there not been such major tax cuts in the last couple of years?

BLITZER: What about that, Steve Forbes?

FORBES: Not at all. The tax cuts of the last couple of years have made the American economy strong. We have the strongest economy in the developed world today, growing at 3.5, 4 percent. It’s starting to reduce the budget deficit.

This was followed by a rather sad debate over business cycles where Mr. Forbes accented his disinformation with a little profanity. But business cycles come and go with the economic growth issue being one over savings and investment for long-term growth. Mr. Forbes should know that the Truman-Eisenhower-Kennedy-Johnson-Nixon-Ford-Carter era of fiscal responsibility had average growth equal to 3.5% per year versus the Reagan-Bush41 record of lower investment and only 3% growth per year. Average growth under Clinton was 3.7% per year versus 2.5% per year under Bush43. Yet, neither Blitzer nor Reich called Forbes on his many intellectual fouls.