AP turns itself into Steno Sue:
Government Benefit Programs in Trouble – Trustees Project Serious Financial Challenges for Social Security and Medicare: Trustees for the government’s two biggest benefit programs warned that Social Security and Medicare are facing “enormous challenges” with the threat to Medicare’s solvency far more severe. The trustees, issuing their once-a-year analysis, said the resources in the Social Security trust fund will be depleted by 2041.
When I first read this, I thought – what a load of crap. OK, I should back up from the profanity and explain what I mean. Let me do this with a personal analogy. As my kids were growing up, I saved a lot to fund their college education. Over the past five years, I’ve paid a lot to pay for their college education so my bank account reserves did decline over the past five years. But at no point was I not able to buy groceries. Why? Because I still have a steady stream of income. Maybe I should just turn this microphone over to Dean Baker for more:
There was nothing in these reports suggesting any qualitative deterioration in the financial state of these programs compared to their situation last year. The trustees claim, reported in this article, “that financial pressures will begin much sooner when the programs begin paying out more in benefits each year than they collect in payroll taxes” is simply a lie. Under the law, both programs have distinct streams of funding in the form of a dedicated payroll tax. They have accumulated a large surplus from this tax which is available to be used to cover projected shortfalls in the decades ahead (Medicare already faces a shortfall). The fact that the expenses exceed revenue for a specific year makes no difference whatsoever for either program, as long as it has money in the trust fund to cover this shortfall. President Bush’s trustees are either ignorant of the laws governing the operation of Social Security and Medicare or they deliberately misled the public, presumably to gain support for cutting these programs. Either way, the inaccuracy of their assertions is extremely newsworthy.
But AP’s Martin Crutsinger does not challenge the inaccuracy of the Administration’s claim. Rather he just reports them as if they were true.
In the meantime, check out Paul Krugman:
the difference between projected outlays and projected revenues over the next 75 years. This is the thing that’s supposed to get steadily worse as time goes by, as the 75-year window contains ever fewer years in which the baby boomers are in the work force, paying payroll taxes, and ever more years when the boomers are out of the work force and collecting benefits. In fact, however, the actuarial balance has been improving rather than worsening. It’s now better than it’s been since 1993. What this tells us is that projections made in the mid-to-late 1990s were, in the light of subsequent revisions, way too pessimistic. Moral: Social Security’s financial problem is relatively minor. It doesn’t deserve the emphasis it receives from most pundits.
Update: Tom Maguire leaves the following canard as a comment:
Meanwhile, as I diligently saved for the college fund my wife spent all of it, and more, on nice clothes and fancy vacations, so in fact, our net family “savings” never existed and we have had to take out a second mortgage on the house. Now, however, I am actually writing the checks to cover college tuition, so either my wife will have to cut back elsewhere, or we will need to apply for a third round of financing on our home.
Tom “Just One Minute” Maguire used one of my analogies. But Tom missed a crucial element. I’m divorced from my ex-wife. And she did try this stunt with a credit card she took out in my name. Guess what Tom? The credit card company realized that they never could bill me for her fraud.
Tom? Your analogy really is old and has been demolished many times. Why one would bother with this old canard is beyond me.