On Sunday, October 29, the Washington Post published a front-page article by Lori Montgomery about Social Security. A number of commentators on the left criticized the Post’s portrayal of Social Security finances. The following Sunday, the Post’s Ombudsman posted a follow-up piece that defended the article in some respects. Unfortunately, while attempting to accommodate the viewpoints expressed by critics, the Ombudsman committed some factual errors that undercut the original article’s informational value.
At least two different issues involving the Trust Fund strike many commentators as important:
- The bonds in the Trust Fund embody real interest-earning assets of Social Security, and the program has full authority to pay benefits so long as the TF has a positive balance.
- A positive Trust Fund balance by itself doesn’t tell us how we will generate the economic resources to pay for Social Security benefits.
Both of these statements are true, but they represent different perspectives. Many of the Post’s critics were focused on issue #1, while the article focused primarily on issue #2. The argument was thus less about the facts, and more about which perspective is more important.
The Ombudsman’s piece unfortunately made a couple of factual errors, the most glaring of which was the assertion that Social Security “does not contribute to annual deficits.” This is incorrect. Social Security is adding approximately $151 billion to the total federal deficit in 2011. Whenever program costs exceed tax collections this adds to the deficit, and neither the Trust Fund’s interest income nor any other general revenue transfers change this. The non-partisan scorekeepers all agree on this. (See the full article for references).
The Ombudsman’s piece also contained this mistaken passage about the Trust Fund:
The Social Security Administration bought these bonds from the Treasury during the years when the trust fund was intentionally building up a surplus of payroll tax receipts because the baby boomers hadn’t started to retire. The 1983 reforms to Social Security, agreed to by Democrats and President Reagan, designed it this way. It’s working precisely as planned. (Emphasis added).
This is a myth – a widely-believed myth, but a myth nevertheless. One especially good resource on this history available online is a 1997 Congressional Research Service report on the 1983 amendments: (See the full article for other references).
Various misperceptions of their intent have developed over the years, among them being that Congress wanted to create surpluses to ‘advance fund’ the benefits of post World War II baby boomers. . . There is, however, little evidence to support the view that the surpluses were intended to pay for the baby boomers’ retirement.
When the reforms developed by the Greenspan Commission and Congress were scored, the balance of the Trust Fund was not even counted in the calculations. Future interest earnings of the Trust Fund were also ignored. There is simply no way to square 1983’s scorekeeping decisions with an intent to pre-fund the Boomers’ retirements by building up a large Trust Fund.
In sum, the Washington Post had printed an important story about Social Security finances, one generally consistent with the analyses of non-partisan scorekeepers. In response to complaints from outside parties, the Post’s Ombudsman published a follow-up piece that got some critical points wrong. That’s too bad. The public should know the salient facts of Social Security finances, even if they’re facts that not everyone chooses to emphasize.
(photo credit: Trisha Shears)