Social Distortion

Like all good conservatives, the ConWeb has done its part in cheerleading for President Bush's plan to carve private accounts out of the Social Security system. ConWeb writers and columnists have promoted the Bush administration's talking points, advanced its scare tactics and demonized its opponents.

As a result, the ConWeb has spread a lot of misinformation about Social Security. Let's examine these distortions and outright lies and set the record straight.

Scare tactics

In a December 2004 NewsMax story by that avatar of ConWeb bias, Jon Dougherty, painted Social Security in dire terms: "Quite simply, if the current system isn't phased out or, at a minimum, given a major facelift, it's just a matter of time before it goes belly-up."

That kind of thinking set the stage for even more dire -- and erroneous -- predictions. The biggest whopper came in a September 2004 NewsMax article claiming that "it is estimated that the system will become insolvent in 2018." Wrong; what actually is projected to happen in 2018 (or, according to the latest projection, 2017) is that Social Security payments will exceed payroll tax income, meaning the trust fund will need to be tapped. If no changes are made in the program, the closest thing to Social Security "insolvency" -- depletion of the trust fund -- is projected to occur in 2041. And even then, Social Security could still pay out 73 percent of currently promised benefits.

In a Feb. 28 NewsMax column, Vincent Fiore claimed that "By 2077, the unfunded liability of Social Security will be a mind-warping $25 trillion." (Italics his.) Fiore's mind was so warped by this number, apparently, that he couldn't recognize that it is wildly inaccurate, since it merely adds up projected yearly Social Security shortfalls. This number -- also pushed by Fox News and the conservative Heritage Foundation -- is meaningless because it ignores a basic law of economics, the "time value of money," which assumes that a dollar today is worth more than a dollar tomorrow due to compound interest. The more realistic number, from the Social Security trustees, is that $3.7 trillion invested today would make up for the shortfall.

A March 29 WND column by Star Parker confuses the issue by piling a projected Medicare shortfall on top of Social Security, claiming that the "shortfall of projected funds ... is around $75 trillion." That is a number promoted by conservative think tanks and presumably calculated the same misleading way as the $25 trillion figure.

In an April 1 WorldNetDaily column (appropriately enough, since a lot of foolish assertions are contained within), Heritage Foundation vice president Rebecca Hagelin called Social Security a "greedy ... Ponzi scheme" and plugged the foundation's Social Security benefit calculator, which purports to show "what your child can expect to 'earn' on all the money that crazy Sam will take from him." Hagelin claimed that after running the Heritage calculator on behalf of her teenage son, "at best, he'll receive a -1.57 percent return each month on the money that was taken from him." But Heritage's methodology behind the calculator's numbers are misleading, designed to make private accounts look good and Social Security look bad.

Hagelin also laments the alleged future of "my godson, Michael, who's 16 and black. Because the average lifespan for a black male his age is around 64 years old, Michael can expect to be robbed blind by Uncle Sam." Hagelin misleads here, too; lower overall life expectancy for blacks compared to whites is largely due to higher mortality rates for infants and youths, who generally don't pay Social Security taxes. The life expectancy for blacks who live to age 65 is 78.2 years, only two years shorter than white males who live to age 65. Hagelin's claim also ignores Social Security's survivor benefits, which are passed on to family members after a worker's death.

No trust fund, just IOUs

NewsMax was already advancing this distortion back in 2002, when Phil Brennan claimed: "There is no real money in the so-called trust fund -- just all those worthless IOUs." Then, he screamed it in all capital letters to hammer home the point: "REPEAT AFTER ME: THERE IS NO SOCIAL SECURITY TRUST FUND -- THERE IS NO MONEY IN MY SOCIAL SECURITY ACCOUNT. IF YOU DIE THE DAY BEFORE YOU REACH 65, ALL THAT MONEY YOU PAID INTO THE SYSTEM IS GONE. IT NEVER WAS YOURS. YOUR HEIRS GET ZILCH." Brennan, like Hagelin, apparently never heard of survivor benefits.

Doubting the existence of the trust fund became a cottage industry earlier this year. The A Jan. 24 NewsMax commentary by Allen W. Smith responding to a Washington Post article makes the claim that the treasury bonds held by Social Security are worthless because nothing tangible is backing them up: "They are not marketable, they have no cash value, and they are not real assets." He repeated a senator's claim that those treasury bonds are "a 21st century version of Confederate banknotes."

A Feb. 7 NewsMax article repeats a claim by professional old person Art Linkletter, who is the kindly public face of AARP-basher and conservative front group USA Next, that "There is no Social Security trust fund. There are only IOUs."

WND columnist Craige McMillan claimed on Feb. 24 that Social Security "is stuffed full of paper IOUs prettied up with the Treasury's seal."

A March 10 CNSNews.com commentary by Christopher Adamo claims the Treasury notes in which the Social Security trust fund is invested is just a "government issued 'IOU'" that is "[n]ot even worth the paper it is written on," adding that "those promissory notes hold no monetary value whatsoever. Instead, they are nothing more than confessions of the original theft. If they are to be repaid, it will be by the very same citizenry that was overtaxed to create the surplus in the first place."

The truth is that the Treasury bonds in which the Social Security trust fund money is invested are backed by the full faith and credit of the federal government, like any other Treasury bonds. As Media Matters points out:

If this description of the trust fund is accurate, it is also an accurate description of every mutual fund account, every personal savings account, every checking account, every certificate of deposit, and every money market account owned by Americans, as well as hundreds of billions of dollars of U.S. treasury bonds owned by foreign central banks worldwide. All of these are "just I.O.U.'s." In fact, the private account plan that Bush has been advocating, which would allow workers to divert nearly two-thirds of their share of payroll taxes into portfolios that would include stock funds and government bonds, would also be "just I.O.U.'s."

Chile and Galveston

The December 2004 NewsMax article by Jon Dougherty offered a typically one-sided view of Chile's retirement system, often held up by conservatives as a model for Social Security reforms here. Dougherty makes the dubious claim that Chile's system is "one gleaming, shining, real-life successful example" of success and repeated a claim by President Bush that Chile is "a 'great example' of reform for the U.S. system." A 2000 NewsMax column by Diane Alden made the fantastic claim that in Chile's system, "there is every indication that nearly everyone in the country with a job will retire as a millionaire."

But a New York Times report on the Chilean system points out that "many middle-class workers who contributed regularly are finding that their private accounts -- burdened with hidden fees that may have soaked up as much as a third of their original investment -- are failing to deliver as much in benefits as they would have received if they had stayed in the old system."

A Feb. 3 CNSNews.com story touted an alternative program in Galveston, Texas, where county employees opted out of the Social Security system and are running their own retirement program, Reporter Jeff Johnson claimed that the program has been "widely described as a phenomenal success." But Johnson makes no mention of a 1999 General Accounting Office report which points out that if Social Security was turned into a Galveston-type system, only benefits for higher-wage earners and initial disability benefits would increase, while all middle- and lower-class earners would receive lower benefits.

Distorting FDR

A Feb. 7 WND story repeated a claim by Wall Street Journal columnist John Fund that President Franklin D. Roosevelt "looked into the future and saw the need to move beyond the pay-as-you go financing and eventually establish 'self-supporting annuity plans.'" WND's Craige McMillan recycled the claim on Feb. 24, writing that "FDR himself said that the second phase of Social Security would be private accounts." In an April 29 CNSNews.com column, Frank Salvato claimed that "A voluntary contributory annuity, translated from the language of the early 20th Century, refers to privatization."

The truth is that the "voluntary contributory annuities" Roosevelt was referring to were not a replacement for the Social Security system's guaranteed benefits, but as part of a replacement for the original part of Social Security that provided benefits to those too old to have contributed to the program. Additionally, they would differ from private accounts in that their funds would be deposited into and paid out of the Social Security trust fund, and they would provide a government-guaranteed benefit like mandatory contributions.

Roosevelt is not the only Democrat conservatives have distorted. In a Feb. 15 CyberAlert, the Media Research Center approvingly cited a Fox News Channel report distorting quotes by President Clinton and current House minority leader Harry Reid approving investing Social Security funds in the stock market to make it appear that they approved the Bush plan of private accounts. But Clinton and Reid were actually referring to a plan to invest Social Security trust fund money, not diverting money from Social Security completely, which is what the Bush private accounts plan does.

Slanted 'news' stories

CNSNews.com is the main offender here, offering up several one-sided "news" articles on the issue. A March 23 article quotes only Republicans regarding the latest report of the Social Security trustees setting financial projections for the program. A March 16 article, headlined "Bush Sets Record Straight on Social Security," quotes Bush's talking points uncritically, then leads into a list of Democratic talking points by blaming them for politicizing the issue: "The debate over Social Security has been intensely political since the Bush administration first broached it, and recent communications from Democrats suggest that's the way it will continue to be."

A March 30 story also took a blame-the-Democrats approach: "President Bush has floated his plan as a starting point for future discussion, and he insists that he's open to all ideas, from people on all sides of the issue. But so far, all he's hearing from his opponents is "no."

The headline of an April 29 story on Bush's promotion of a de facto means-testing plan for Social Security inaccurately claims the plan would provide "more for the poor." The article itself, by Susan Jones, offers contradictory claims, calling it a "more-for-the-needy plan," then noting that Robert Pozen, designer of the plan, said it "would leave Social Security benefits intact for people earning an average of $25,000 a year over their entire working careers." Pozen's claim is accurate and Jones' assertions aren't; low-income workers would get no more money under the Pozen plan than they are currently promised under Social Security.

Transition costs

Just plain weird

The ConWeb is also filled with random blasts of vitriol and strange claims about Social Security. WND's McMillan blasted old baby boomers for their alleged selfishness:

How do you think the baby boomer generation would treat this situation, if it were reversed? Compulsory retirement at age 65 ... compulsory euthanasia at 70? I wish someone could explain to me the moral justification for a generation of boomers sitting on their duffs in front of casino slot machines while their children and grandchildren enter indentured servitude to the welfare state to pay the bill? How are those kids going to buy a home, raise their own children, send them to college and save for retirement? Or don't the boomers care?

WND's BizNetDaily columnist Steve Marr blames the Social Security crisis on abortion: "In 2025, when Social Security is projected to be in real trouble, I wonder if anyone will stop to think about the missing persons who might have averted it? They alone could not make up the entire shortfall, but they would've helped immensely."