The Hill misrepresents details about Social Security and Geithner's statement

[ProSense]

Dean Baker:

The Hill told readers today that:

"The (Social Security) trust fund itself has a theoretical $2.6 trillion surplus, but that money has been spent by the federal government like general revenues."

<...>

Of course the trust fund does exist in the world, it is held in the form of U.S. government bonds. These bonds are referred to as "IOUs" in the Hill piece. It is highly unusual to refer to bonds of private corporations or government bonds as IOUs.

The article also makes the bizarre assertion that: "the payback (use of interest on the bonds held in the trust fund to pay Social Security benefits) has arrived at a very difficult time, when Washington is running a $1.6 trillion budget deficit." Actually, the interest rate on government debt is very low right now. This means that it is in fact a very good time for the government to be replacing the bonds held by Social Security with other bonds.

Readers can assume, based on these comments, that the Hill does not like Social Security and wants to see benefits cut. Usually this sort of editorializing is left to the opinion pages but apparently the Hill could not contain its animosity towards the program.

The Hill ariticle reads like it's determined to give the impression that a Presidential decision not to cut Social Security will be a political one, not economic. The article (Social Security reform splits White House political, economic teams) cites unnamed sources and reeks of RW spin:

But Obama’s political team, led by David Axelrod, David Plouffe and Jim Messina, are urging the president to understand that backing benefit cuts could prove disastrous to his 2012 reelection hopes, sources say.

“The political people would prefer not to be accused of being the party that cuts Social Security in those ways. Some political people would like to see the president out there defending the program and making the case that it has nothing to do with the deficit.”

A second Democratic source, who has pushed to reform Social Security by increasing the flow of revenues to the trust fund and reducing benefits, said, “Geithner’s been the most forward-leaning.”

Geithner told the Ways and Means Committee in February that Congress must shore up the trust fund. He said the president would work with lawmakers but would not accept drastic cuts.

Why is the article misrepresenting what Geithner said? Reuters (February):

(Reuters) - Treasury Secretary Timothy Geithner said on Tuesday the United States needs to shore up its massive pension program without slashing Social Security benefits or subjecting them to the "whims" of the stock market.

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The Obama administration will work with Congress to consider ideas to strengthen Social Security -- the pension program for the elderly and disabled, Geithner said.

"However, we will reject plans that slash benefits; that fail to protect current retirees, people with disabilities and the most vulnerable; or that subject Americans' retirement savings to the whims of the stock market," Geithner said.

Geithner's full statement. Here is the relevant paragraph:

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Finally, the President is committed to strengthening Social Security. Together with Congress, we will consider ideas that put Social Security on more sound financial footing over the long term. However, we will reject plans that slash benefits; that fail to protect current retirees, people with disabilities and the most vulnerable; or that subject Americans’ retirement savings to the whims of the stock market.

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Jack Lew on Social Security

[Vincardog]

1. IF BO cuts SS he will be a 1 term president

[golddigger]

2. Damn straight!

[ProSense]

5. That's what his detractors are hoping.

It's not going to happen.

[jaxx]

3. The rights dream is to destroy Social Security.

The Hill is just helping them along. Glad to see them shown to be liars once again.

[OHdem10]

4. Could it be the Congress has used so much SS Funds for other

purposes and programs, they are now on the spot.
Either pay back the Trust Fund or cut benefits.

I say make them pay the money back.

[bossy22]

7. most of the trust fund is actually in T-notes

so liquidating our own holding of T-notes will raise the cost of borrowing more money to finance our debt. its a tricky situation

[mcar]

6. ProSense, thank you once again

for injecting facts into a discussion. :toast:

[bossy22]

8. i dont think cutting the benefits are the answer

I think a better policy (and a bit unpopular around here) would be to raise the age slightely and get rid of the SS tax cap.

[whosinpower]

9. That isn't how I read the Hill article

I read the Hill article - which you did not include...

In a nutshell - it is saying that political advisors are telling Obama that cutting Social Security is POLITICAL SUICIDE. His economic advisors are saying that benefit cuts would be less draconian with Democrats controlling the White House. Cutting costs for the safety net would help bond markets and restrain future interest rates, they add.

The Hill's article states that for now - Obama's political team are winning the debate.

Does Geithner come out publically and say that cutting social security would help the bond market and restrain future interest rates, and thus, they should cut it now to save a bit later? No - not publically.

He did make a statement in February about the President's official position.

And what does the White House say about this internal strife....sleight of hand and careful wording....snip -

"The notion that the president’s team is divided on our approach to this issue is flatly untrue. The president and his team are unified in the belief that the only way to reach consensus on strengthening Social Security for future generations is for Democrats and Republicans work together in a bipartisan way, and any suggestion to the contrary is simply false."


Some might say the White House is seeking political cover under the auspices of "bipartisanship." When a person stops and considers that cutting social security, whether or not you are dem or gop - IS political suicide - they both know it, the GOP wants the DEMS to do what they do not have the gonads to do themselves...and if the Dems are considering trying this in an attempt to "help" the bond market....that would give an indication that the bond market is still very....unconfident. If the bond market was - confident, then there would be no reason to do this.

And, academically speaking, it might be interesting to discuss the effect the bond market and interest rates have on the foundation of Social security.

Having said all that, it would be incredibly myopic to think that there are not discussions at the White House about Social Security - and that there would be disagreements internally amongst his advisors. If they all agreed on everything....they are poor advisors.

[ProSense]

10. "I read the Hill article - which you did not include..."

Check the OP again. It's the four paragraphs after "RW spin."

Regardless, The Hill's attempt to paraphrase Geithner's statement is a complete fabrication.

[whosinpower]

11. ah - four paragraphs

and no link to the original, whilst claiming the whole article is right wing spin.

It is a habit of mine to verify before jumping in agreement - which is why I wondered why you did not include the link. Things can be taken out of context SO easily - yes?

So....you honestly beleive that the economic advisory committee make no injection into the debate on how to tackle/maintain Social Security? Wow. Just wow.

[ProSense]

12. "and no link to the original"

Again, check the OP: "(Social Security reform splits White House political, economic teams)"

In fact, there is a limit to how much of the article can be excerpted.

"...whilst claiming the whole article is right wing spin"

I made a point in the OP, including the fact that the article misrepresents Geithner's statement.

That is a fact, as his statement is not what The Hill claimed.

"It is a habit of mine to verify before jumping in agreement"

Hey, you want to buy The Hill's BS, feel free, but if you're going to question someone's credibility at least make certain that your claims (about what's not in the OP) are accurate.

[whosinpower]

13. Yeah - still not really seeing the misrepresentation that you are

Geithner's February statement - the real one -


Finally, the President is committed to strengthening Social Security. Together with Congress, we will consider ideas that put Social Security on more sound financial footing over the long term. However, we will reject plans that slash benefits; that fail to protect current retirees, people with disabilities and the most vulnerable; or that subject Americans’ retirement savings to the whims of the stock market.


the Hill's version of Geithner's statement - snip - Geithner told the Ways and Means Committee in February that Congress must shore up the trust fund. He said the president would work with lawmakers but would not accept drastic cuts.

“We will reject plans that slash benefits; that fail to protect current retirees, people with disabilities and the most vulnerable; or that subject Americans’ retirement savings to the whims of the stock market,” Geithner told lawmakers.


Oh be still my beating heart - that right wing BS! No? It isn't the statement that is misrepresented - it must therefore be that IF Obama chooses to NOT cut social security, it would be for political reasons....OHMYGAWD - how awful! Is that the right wing BS?

So, then it must be the unnamed sources who indicate that Geithner is debating the merits of cutting social security to help the bond markets....yes? That is the right wing BS? Am I close?