MSNBC Calls Bush on His Social Security Lie

Martin Wolk, MSNBC’s Chief Economics Correspondent, calls Bush to task on his false claims of an imminent social security crisis. The question now is will the rest of the corporate media follow suit or is this an anomaly.

Social Security, solvency and political spin

How credible are President Bush’s dire predictions?

By Martin Wolk

In its 70-year history, Social Security has faced dire predictions, including the threat of insolvency. In the mid-1970s and again in the 1980s, the program faced staggering projections of short-term and long-term deficits and came within months of depleting its reserve funds.

In 1977, changes were made that were supposed to keep the system solvent well into the 21st century. But after five tumultuous years Congress and President Reagan were forced to confront the issue again. This time a bipartisan group of lawmakers and business leaders, under the direction of Alan Greenspan, came up with a solution that put the system on a path that is projected to keep it solvent until 2042 or 2052, according to the most widely accepted estimates.

Nancy Altman, who was an aide to Greenspan on the Social Security commission, remembers “exactly the same kind of hype” as we are seeing today. “It was exactly the same – the sky is falling,” said Altman.

The difference is that the problems facing the system in the 1980s were truly urgent. “It really was a crisis,” said Mary Falvey, a member of the Greenspan commission. She remembers being told that Congress had to act by April 1983 to keep the Social Security checks from grinding to a halt two months later.

This time around, Social Security is years away from anything that honestly could be described as a financial crisis. But that has not stopped President Bush from trying to whip up enthusiasm for his proposed personal retirement accounts by warning of an imminent disaster.

“If you’re 20 years old, in your mid-20s, and you’re beginning to work, I want you to think about a Social Security system that will be flat bust, bankrupt, unless the United States Congress has got the willingness to act now,” he said Tuesday at a forum on Social Security. The stark choice of words was hardly a slip of the tongue – Bush used the word “bankrupt” five times in the 45-minute session.

He also warned of a potentially “bankrupt” system in a radio address last month, referring to demographic changes that signal a “looming danger.”

“In the year 2018, for the first time ever, Social Security will pay out more in benefits than the government collects in payroll taxes,” Bush said.

That is just plain wrong. In 14 of the past 47 years, including 1975 to 1983, Social Security paid out more in benefits than the government collected in payroll, with the gap reaching $10 billion in 1983. So the projected “crossover” point in 2018 is a relatively meaningless milestone, say opponents of Bush’s privatization plans, even as they acknowledge the system faces long-term problems.

Bush’s statements “appear designed to further a widespread perception, especially among younger people, that Social Security will entirely collapse and that there will be nothing for them when they retire,” said Bob Greenstein, executive director of the Center on Budget and Policy Priorities.

The White House press office did not return phone calls seeking an explanation.

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