Social Security `Trust Fund' Whopper
Last week, Sens. Kent Conrad and Byron Dorgan managed to (1) kill the balanced budget amendment, (2) deal Republicans their first big defeat since November and (3) make Democrats the heroes of Social Security. A hat trick. How did they do it? By demanding that any balanced budget amendment "take Social Security off the table" -- i.e., not count the current Social Security surplus in calculating the deficit -- and thus stop "looting" the Social Security trust fund.</br></br>In my 17 years in Washington, this is the single most fraudulent argument I have heard. I don't mean politically fraudulent, which is routine in Washington and a judgment call anyway. I mean logically, demonstrably, mathematically fraudulent, a condition rare even in Washington and not a judgment call at all. Consider:</br></br>In 1994 Smith runs up a credit card bill of $100,000. Worried about his retirement, however, he puts his $25,000 salary into a retirement account.</br></br>Come Dec. 31, Smith has two choices: (a) He can borrow $75,000 from the bank and "loot" his retirement account to pay off the rest -- which Conrad-Dorgan say is unconscionable. Or (b) he can borrow the full $100,000 to pay off his credit card bill and keep the $25,000 retirement account sacrosanct -- which Conrad-Dorgan say is just swell and maintains a sacred trust and staves off the wolves and would have let them vote for the balanced budget amendment if only those senior-bashing Republicans had just done it their way.</br></br>But a child can see that courses (a) and (b) are identical. Either way, Smith is net $75,000 in debt. The trust money in (b) is a fiction: It consists of 25,000 additionally borrowed dollars. His retirement is exactly as insecure one way or the other. Either way, if he wants to pay himself a pension when he retires, he is going to have to borrow the money.