A Stitch in Haste

I was retrolinking to this post about the fraudulent Social Security "trust fund" recently, and I realized that it was over a year old. Which got me to wondering: why haven't we seen the latest annual report from the Social Security trustees -- a report that is as likely as not to declare that 2017 will now be 2016 and that 2041 will now arrive in 2040?

Now we know why:

President Bush and the Senate are at an impasse over the appointment of trustees for Social Security and Medicare, crippling the panel that supervises the two programs. This, in turn, has delayed the annual reports on the financial condition of the programs, which together account for more than one-third of all federal spending.

The short version is that President Bush has simply renominated the current (Clinton-appointed) "public" trustees, but the Senate leadership wants "turnover."

Meanwhile, no annual report.

As the law currently stands, the report -- now three days overdue and counting -- is supposed to be submitted with or without the public trustees' participation. But one wonders: Perhaps the report again contains bad news -- bad enough for an exemption to be crafted allowing the report to be postponed until the trustee nomination tantrums are resolved. Such resolution to occur, of course, sometime after Election Day.

I'm not a tin-foil hat conspiracy theorist -- except when it comes to Social Security. The politicians involved don't want that report released. At least not quite yet.

Stay tuned.

The Social Security trustees have just released their annual report of the health of the system. The report was delayed by some remarkably silly political wrangling, even by Washington standards -- see my recent post; see also this post regarding last year's report.

The core date for the final, irrefutable exposure of the fraudulent Social Security "trust fund" has not changed -- Social Security expenditures are still estimated to begin exceeding Social Security taxes beginning in 2017, at which time those "government securities" being kept in a filing cabinet in Virginia will be shown to be utterly worthless, as any "IOU from yourself to yourself" must be. The estimate for the (utterly irrelevant) "trust fund exhaustion date" was accelerated from 2041 to 2040.

On a side note, congratulations to the Medicare Hospital Insurance "trust fund," which goes into deficit this year, and to the Disability Insurance "trust fund," which went into deficit last year. Let's see how the government tries to spin the need to "pay back" those trust funds with taxpayer dollars, or increased budget deficits, while continuing to insist that there were "real assets" somewhere in those now hollow accounts.

As I noted yesterday, the trustees of Social Security and Medicare released their annual report on the state of the systems' finances.

Little has changed:

By 2017, Social Security will pay out more in benefits than it collects in taxes, the trustees said in their annual report. The program's trust fund is projected to be exhausted by 2041, one year later than estimated last year.
...
Over time, the programs are expected to consume a growing share of the federal budget. This year, about 7 percent of federal tax revenue goes toward paying Social Security and Medicare benefits. The figure is projected to climb to more than 10 percent by 2012, and 26 percent by 2020, said economist Thomas R. Saving, a trustee.

To keep the programs going, Congress and the president will have to increase taxes, reduce benefits or do both, the trustees said. "Without significant reform, these programs are not sustainable in the long run," Saving said.

It's interesting, and perhaps unfortunate, that the commentary uses total federal tax revenue rather than FICA taxes. The whole point of the Social Security crisis is that FICA taxes, which are over-collected today to fund general federal operations and to understate (i.e., lie about) the true size of the federal deficit, will soon be inadequate to pay for Social Security obligations. The all-important date is not 2041, when the fraudulent Social Security "trust fund" is nominally exhausted, but rather 2017 (only a decade away!) when the "trust fund" will finally and irrefutably be exposed as an accounting (and political) fraud in the first place.

To review: An IOU from myself to myself is worthless. An IOU from the federal government to the federal government is worthless. Calling that IOU a "Treasury security backed by the full faith and credit of the United States Government" does not change its worthlessness — any more than would calling it "zoop."

When Social Security runs into deficit starting around 2017, those IOUs will be "cashed in," which simply means that the federal government, which has already spent the money, will have to raise either taxes or the budget deficit (I'm guessing the latter). But there simply are no "assets" for Social Security to redeem. That has been the great lie all these years — to call a promise to raise taxes or deficits in the future a "trust fund" today.

If a private party tried to lie like that, they'd go to jail.

More thoughts at Cato@Liberty.