CORRECTION, PLEASE!

Social Insecurity

ITEM: President Bush's Social Security commission was accused of being unbalanced by the Minneapolis Star Tribune on July 27th. It has "issued a report that misleads the public on key concepts, exaggerates Social Security's flaws and paves the way for privatization strategy that is unnecessary and wrongheaded." The first example cited as "misleading and reckless," argued the editors, concerns the Social Security trust fund. It is "flat wrong to deny that these are real assets."

CORRECTION: Comprised of eight Democrats and eight Republicans, the commission was co-chaired by former New York Senator Daniel Patrick Moynihan, a liberal Democrat. Nevertheless, the staff report found that in 2016 Social Security will start to take in less in payroll taxes than it will pay out in benefits.

Taxes collected from current workers are paid out as fast as they come in, and exchanged for the illusion of a Crust fund. This fund is but a government IOU. There are, as Treasury Secretary Paul O'Neill has admitted, "no assets" in the Social Security trust fund, and because the fund "does not consist of real economic assets, we are left to rely on the federal government's future decision to either raise taxes, reduce spending or increase borrowing from the public to finance fully Social Security's promised benefits."

This is not a partisan conclusion. Even President Clinton's fiscal year 2000 budget recognized that the trust fund balances "do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits ...