CBO Sleight-of-Hand

I’m late to seeing this, and Bruce has probably already covered it, but Doug Elmendorg at the CBO inadvertently gives away the game on the Administration’s approach to—let alone opinion of—the Social Security “Trust Fund”:

The balances in trust funds have accrued because income associated with those programs has exceeded the expenses; when that happens, the surplus cash flow is used to finance the government’s ongoing activities, and the trust fund is credited with a corresponding amount of Treasury securities. Although trust funds have an important legal meaning, in that they may constrain the amount a program can spend, they are essentially an accounting mechanism and have little relevance in an economic or budgetary sense. The value of Treasury securities held by trust funds and other government accounts measures only some of the commitments the government has made, and it includes some amounts that may not represent future obligations at all. [emphases mine]

Pay particular attention to that last; it’s the closest you’ll find to an acknowledgement from a government official that There is No Crisis.

As Bruce has noted, only by distorting the worst-case and median cases does the Administration produce scenarios under which the Social Security Trust Fund—if credited with its accruals as the Greenspan Commission intended (see “Off-Budget” Again-“; h/t PGL here)—does not have the funds to pay its obligations in perpetuity. (As Dean Baker once observed, if you take those scenarios and apply them to the equity markets, the case for privatization disappears even more quickly.)

Doug Elmendorf’s admission that there may well be a perpetual Social Security surplus, even if it is phrased as “some amounts that may not represent future obligations, stands in stark relief of the most notable “unforced error” of the Obama Administration.