For my next trick....

The ability of the SCLM to internalize GOPper talking points continues to amaze. It's like watching a good professional magician for the third or fourth time: The act no longer surprises, but it's still an astonishing spectacle. The latest example to come to hand is an AP article for March 24 by one Glen Johnson:

A new report on the financial health of Social Security changed the numbers only slightly and the terms of the political debate even less so.

The trustees who oversee the government retirement program said Wednesday that Social Security will begin paying out more in benefits than it receives in payroll taxes in 2017. That means the government at that point will have to increase its borrowing on financial markets, raise taxes or divert money from other government programs to sustain Social Security at current levels.

The trustees also estimated in their annual report that the program, which is about to be inundated with baby boom retirees, will go broke in 2041. That's the date, the trustees said, that the $1.6 trillion accumulated in trust accounts from excess payroll taxes over past decades - really just IOUs because the government already has spent the money on other things - will dwindle to zero from sending out monthly benefit checks. [Emphasis obviously added.]

This is just - there aren't words. Spouting nonsense takes no ability, you can tell that just by listening to Rick Santorum. But to spout that much nonsense in so short a space, especially in a forum that lays claim to at least a degree of impartiality - that takes real talent.

What happens in 2017, well first off, it's quite possible that nothing relevant to this discussion will happen in 2017 or for some time thereafter. The projections made by the trustees of Social Security are based on very conservative, not to say pessimistic, economic assumptions. Thus, every year the economy grows more than the 1.8% per year they use as a basis, the supposed day of reckoning recedes into the future.

But leave that aside for now, we'll come back to it later. Accept 2017 as the year. At that point, the Social Security Administration will, as the article notes, begin paying out more in benefits than it brings in, in taxes. So at that point the system has to start drawing on the surplus that was specifically created for this purpose. There is no reason to expect this to have any particular impact on the rest of the government and Johnson's list of disastrous or at least unpleasant-sounding alternatives is just fear-mongering that is misleading where it's not false and false where it's not misleading.

Going broke in 2041? That's the year, the trustees predict, that the surplus will be exhausted and Social Security will have to go back to the pay-as-you-go basis on which it has functioned for most of its history. But here's an often-ignored point; certainly Johnson doesn't address it: While benefit increases to recipients are based on the inflation rate, initial benefits are not. They're pegged to wage increases. Because, happily, over time wages tend to rise faster than prices, initial benefits to new retirees tend to rise in real terms.

The trustees now predict that in 2041, when the system is "broke," taxes coming in will be enough to fund 74% of projected benefits. Not 74% of what they are now, but 74% of what they otherwise would have been in 2041. Allowing for projections of inflation and wage increases, that 74% of projected benefits is more in real terms than benefits provided to new retirees now. In other words, even at that level, people retiring in 2041 will be better off, have a higher standard of living, than those retiring now. Remember, that's if we do nothing at all.

By what bizarre definition does this describe a system that is "broke?"

Going broke in 2041? Another movable feast because of the low-balling of economic predictions by the trustees. In 1996, the Year of Horror, they said, was to be 2030, 34 years in the future. In 2000, it was 2036, or 36 years in the future. And in 2004, it was to be 2042 - 38 years in the future. Now, in 2005, we're back to our Day of Doom being 36 years away. But even at that, it's still further off than it was in 1996. Even moderate economic growth will keep pushing the date off; indeed, a growth rate of 2.4% per year would prevent the surplus from ever being exhausted.

Now, it could be argued, not unfairly, that taking a more pessimistic attitude toward long-range prospects, by which things would likely turn out better than predicted, is preferable to highly optimistic figures which could leave you flattened if they don't pan out. But it can't be argued that such forecasts are a sound or even reasonable basis for trying to stampede people into rashly cutting their own retirement throats. That's especially true since the trustees' figures aren't the only ones: Using slightly more optimistic but still cautious estimates, the Congressional Budge Office predicts the year the surplus will be gone is 2052.

But the biggest whopper is the business that the trust fund is "just IOUs." This can't be ascribed to ignorance or even sloppiness, as its insertion was clearly deliberate. Johnson is either being consciously deceptive or willfully ignorant. The surplus is invested. Of course it's not just sitting in a vault somewhere. It's invested. In Treasury bonds and other government instruments, backed, as they say, "by the full faith and credit of the United States government." If those are to be regarded as "just IOUs," then all the people, all the corporations, all the investment houses, all the pension plans, all the foreign governments, that have likewise invested in government securities likewise have "just IOUs," with, we are apparently supposed to think, no guarantee they will be paid. Your bank account is just IOUs, since those sums are, again, not just sitting in a vault. And if that bank extends you a mortgage, all it's getting from you is some IOUs.

This is absurd beyond measure, disgraceful beyond understanding. Glen Johnson clearly deserves his new, honored place in the Hack Hall of Fame.

Some previous posts about Social Security over the past few months, which have links to sources documenting what I've said here and which I'm just too tired to redo now, have come on December 16, December 20, February 1, February 3, another on February 3, February 8, February 10, and March 3.

Footnote One: Johnson also says that

[v]irtually ignored by both sides were the findings of a separate report from the trustees ... that said Medicare ... began paying out more in benefits than it received in taxes as of last year. The trustees also predicted Medicare would go broke in 2020 ... more than two decades ahead of Social Security.

Well, I dunno about the Dims, but the GOPpers ignored it because it's just not a problem: Back in mid-December, Shrub said he wasn't worried about Medicare because his "reform" bill "introduced market forces" into the system, so the problem is solved.

Footnote Two: David at Ruminations had a sudden flash of insight as to what all the media talk really means.

100% unemployment by 2041!

That's right, I could hardly believe it when I read the headlines, but its true. ... [T]he conclusion is unavoidable. No more American jobs by 2041 according to the Social Security Trustees....

The headlines say that Social Security will be broke by 2041. I don't know what y'all's sense of the word "broke" is, but mine is "no money". Now, Social Security is pay-as-you-go. The benefits are paid out from the payroll taxes of current workers. The only way there'd be no money for benefits is if there were no more payroll taxes coming in, ergo, no one's working.

I guess all those tax cuts aren't going to do anything for the economy after all.