Early in 2011, President Obama’s director of the Office of Management and Budget said, “Social Security benefits are entirely self-financing. They are paid for with payroll taxes collected from workers and the employers throughout their careers. These taxes are placed in a trust fund dedicated to paying benefits owed to current and future beneficiaries.”
Several months later, during the heat of the debt ceiling debate, President Obama told CBS anchor Scott Pelley, “I cannot guarantee those checks will go out on Aug. 3 if we haven’t resolved this issue. Because there may simply not be the money in the coffers to do it.”
The president’s assertion flatly contradicted the claims of his director about a trust fund paying benefits to current and future beneficiaries. If funds were actually sitting in a dedicated trust fund, those Aug. 3 payments the president referred to should not have been at risk. So why did Mr. Obama make that statement?
Your guess is as good as mine, but these are the types of contradictory statements that epitomize the trust issues voters have with the political class. Whether there’s a Social Security “trust fund” is a clear-cut question that should have a simple yes or no response, yet we cannot get a straight answer from Washington. Why?
The reason is that politicians of both parties use the terms “balanced budget,” “trust funds,” “spending cuts” and “pay as you go” and then twist their meanings beyond all recognition.
For example, in the private sector the beneficiary of a trust owns the trust’s income and may own the trusts assets. However, in the world of the political class, the federal government owns and manages the assets and earnings of most “trust funds,” including Social Security and can unilaterally change the law to raise or lower future collections and payments or change the purpose for which these funds are used.
Said another way, the money in government “trust funds” can be diverted to pay for anything the party in power wants to spend it on. In essence, our government treats all funds as if the money is in a single pot that can be spent on anything according to whims of Congress. Even more disturbing, the Supreme Court has given its blessing to this interpretation.
So let’s look at a few simple true-or-false questions to determine your Social Security IQ. To ensure accuracy, I’ve used the congressional record, the president’s 2012 budget, the definitions of the Office of Management and Budget and recent polling by Gallup, Pew and Rasmussen to validate the answers. True or false:
1. The first person to collect Social Security paid in a total of $24.75 and collected $22,888.92 during her lifetime.
2. The original intent of and the way Social Security was sold to the American public was to use payroll contributions to give contributors the moral, legal and political right to collect their pensions at some point in the future.
3. Franklin Delano Roosevelt insisted on using the term “contributions,” not “taxes,” when referring to Social Security.
4. The Social Security “trust fund” is made up of a number of diverse and marketable assets.
5. The Social Security “trust fund” is made up of a series of government promises and IOUs.
6. Americans are about evenly divided regarding whether the retirement age or taxes should be raised to save Social Security.
7. The majority of voters believe Congress should decide both how much Social Security contributions should be and at what age people should collect their benefits.
8. The majority of voters do not want to be involved regarding any changes to Social Security.
9. More families pay more into Social Security than they do in federal income taxes.
10. The biggest issue regarding Social Security isn’t finding a program voters can support. It’s finding politicians the voters trust to make the necessary reforms.
Answers: 1 true, 2 true, 3 true, 4 false, 5 true, 6 true, 7 false, 8 false, 9 true, 10 true.
If you scored 9 or above, you should consider running for Congress — please!
A score of 6 or above places you in the 95th percentile of understanding the social contract Franklin Delano Roosevelt made with the American people regarding Social Security.
If you scored between 3 and 5 you’re probably an ideologue.
A score of 2 or below means you likely hold a public office in Washington, D.C.
In future commentaries I’ll examine some non-partisan solutions to this third rail of American politics.
Quote of the day: “Two decades from now, I’m willing to take a look at it. But I’m not willing to take a look at it right now.” — Senate Majority Leader Harry Reid, when presented with the Social Security Trustee Report outlining the trillions in unfunded liabilities.
Butch Mazzuca, of Edwards, writes regularly for the Vail Daily. He can be reached at email@example.com.