State of the onion

So it seems that in his State of the Union address, Shrub claims that Social Security is "headed for bankruptcy."

Okay, let's go through this one more time. We'll start by defining our terms.

lie n. 1. A false statement deliberately presented as being true; a falsehood. 2. Something meant to deceive or give a wrong impression. --lie v. lied, ly-ing, lies. --intr. 1. To present false information with the intention of deceiving. 2. To convey a false image or impression. [American Heritage Dictionary]

By that definition, is the assertion that Social Security is going bankrupt a lie? Was Bush lying? Yes. Period.

Now, there is a narrow legal definition for use in bankruptcy proceedings under which being "bankrupt" is equated with being insolvent, that is, being unable to meet all current debts and without - this is an important part often overlooked - a reasonable expectation of being able to meet them in the future. In such a proceeding, the assets of the bankrupt party are taken by the court and distributed to creditors.

But no one imagines Social Security going into bankruptcy proceedings. There will be no creditors banging on its doors. And in fact if we're going to speak in narrow legal terms, there is no way SS could go "bankrupt" because technically, it does not have "debts." The money in the fund was not obtained by loans and it was not obtained by accepting services with a promise of future payment. In fact, by virtue of the bonds it buys, which are in effect a loan to the rest of the government, the system is a creditor, not a debtor.

The system has "obligations," which are not the same thing. Obligations are promises of future behavior as opposed to legal financial commitments arising from past behavior (which debts are). As a crude illustration, consider a union which has a contract with a company under which the workers are supposed to get a 3% raise next year. The employer has a contractual "obligation" to pay that raise, but is not in "debt" to the workers. If the employer pleads poverty, threatens to close up shop and move, and pressures the union into givebacks so that the raise becomes 1%, then that is now the obligation. The employer has not failed to pay any "debt" because the obligation for that extra 2% never came due.

The obligations Social Security has are ones it has as a federal government program, that is, ones it has taken on itself as a matter of law. It's a social contract rather than a legal one and one which the government has the legal authority to change as it sees fit. The government could, if it chose, simply slash future benefits to whatever degree it felt necessary and :poof: any "insolvency" is gone.

This does not mean that the system should just cut benefits (it shouldn't) or that it should not take steps to insure that all promises that have been made are kept (it should). It does mean it could take such steps and that therefore all the talk of debt, insolvency, and bankruptcy have no real meaning in this context.

What's more, and more important, it's safe to say that when people hear the word "bankrupt," they don't hear the legal definition, they hear instead the more colloquial meaning: "totally lacking in a specified resource or quality; depleted of valuable qualities or characteristics; totally depleted; destitute; ruined."

And I say that it's undeniable that George Bush intended for them to hear it that way, knew they would hear it that way.

But Social Security will not be destitute, will not be ruined, in the Dreaded Year Zero of 2042 even if the ridiculously pessimistic assumptions of the Social Security trustees prove by some bizarre chance accurate. (They project that over the next 75 years the economy will grow at an average rate of 1.8% a year, just slightly better than half that of the 3.4% per year average of the previous 75 years.) What will happen instead is that the surplus - specifically created and built up to see the system over the hump of the "baby boomer" retirement years - will be depleted and we will be back to the "pay as you go" system on which Social Security has functioned for most of its existence.

(The Congressional Budget Office, using a somewhat less pessimistic forecast, projects the fund will have to dip into the surplus in 2020 and will not deplete it until 2052. And while for the sake of future financial security a certain amount of caution is wise in such matters, it should be noted that if the economy grows as fast for the next 75 years as it has in the previous 75 years, the trust fund surplus will not even come close to being used up.)

Even if no changes are made, none, zero, the trustees' own figures say that benefits payable to new retirees in 2042 will be higher in real terms (i.e., after allowing for inflation) than those paid to new retirees now. With no changes, retirees in 2042 will get bigger benefits - will be able to buy more stuff with their checks - than those retiring now. That is a truly, truly bizarre definition of a "bankrupt system."

There is no way the White House does not know this. There is no way they can claim ignorance. There is no way they can honestly maintain the facts say anything different. They know that the system is not going under, that it will be there for those in their 60s, those in their 40s, those in their 20s, those who have not yet even entered the labor market. They know.

And they are lying through their damn teeth when they tell you otherwise.

Footnote: Beware of wingers bearing dictionaries. Already there are attempts being made to justify the word "bankruptcy" by pointing to the legal definition of the term and saying that if come 2042 (or whenever) SS can't pay all the benefits that are now promised, it therefore will be "bankrupt." These attempts to find a way to parse words and pluck out legal definitions as opposed to common understandings to escape the facts is as absurd as the "we never actually said the particular word 'imminent'" nonsense.