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Home Publications Blogs Beat the Press FactCheck.org Does Not Have Access to the Internet

FactCheck.org Does Not Have Access to the Internet

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Friday, 11 March 2011 11:42

That is what this project of the Annenburg Public Policy School told readers today when  it backed up its earlier piece claiming that Social Security does contribute to the budget deficit. If did have access to the Internet, FactCheck.org could have easily discovered references to the "on-budget" budget in any budget document it chose to examine (e.g. here and here). The political figures who FactCheck.org criticized in its initial post were obviously referring to this measure of the budget deficit, as was pointed out in a previous note.

An organization engaged in fact checking statements by public figures should probably invest in an Internet subscription so that it can more accurately do its work.

Comments (12)Add Comment
Wrong, and wrong again
written by Bill H, March 11, 2011 12:08
"The trust funds don’t have "money" in them; they are made up of Treasury securities, which are promises to pay money that the government has already spent for other purposes. That money will now have to be repaid, plus interest, by future taxpayers — or by borrowing and adding to the deficit."

That statement is utter garbage. Don't give me that "promise to pay" and "money spent elsewhere" nonsense, those Treasury securities are, in fact, government debt which must be paid back. The government is not borrowing money to pay Social Security benefits, it is borrowing money to pay the debt that it owes to the Social Security trust fund.

People who want to cut Social Security want to do so in order to permit the government to avoid paying its debt.
...
written by Bill H, March 11, 2011 12:12
Further, the government is not adding to the debt, it is merely transferring the debt from the Social Security trust fund to the general public, or to whoever buys the debt that it uses to repay the Social.

Fact Check is just wrong on every count.
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written by bmz, March 11, 2011 1:15
So Warren Buffett, the Koch brothers, and everyone else who receives interest from government bonds are also adding to the deficit? Who fact checks FactCheck?
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written by Chief, March 11, 2011 1:29
Right, the treasury securities were liabilities for the government from the moment they were issued, not just now because the surplus isn't increasing.
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written by einniv, March 11, 2011 3:43
I'm one of the angry readers they are writing about. They didn't quote me but the quote about the savings account under the Money in the Bank section is similar to what I said. I did use the word analogy.

Sure it isn't a perfect analogy but to say it is inaccurate? You put money in a savings account, the bank takes it and does things with it, at some point in the future they give it back. Ditto for a treasury securities. Right? The only difference is that with the savings account you choose when you take the money back out. My dictionary says that for two things to be analogous means they are: Comparable in certain respects, typically in a way that makes clearer the nature of the things compared.

Does FactCheck need a refresher course in English now too or am I missing something?
you ain't seen nothing yet
written by JM, March 11, 2011 4:12
Of course Dean is absolutely correct, but this is only the tip of the iceberg concerning the Social Security lies. One of the big ones being floated right now is that Social Security is already paying out more than it takes in, which is also incorrect, because it omits the interest being paid on the trust fund.

In sum, all of this amounts to theft - call it what it is. Everybody who has kicked in to SS since the Greenspan commission has "overpaid" in order to manage the Baby Boom uptick in payments, which has been held in trust. The overpayment has been lent from Social Security to the general fund, and the general fund must pay back what it had been lent. Now these evil people will use every lie and then some to steal this borrowed money. Of all the lies being used to punish the workers these days, this is the coldest and most brutal.

At this point, I wouldn't trust FactCheck.org if they told me the sun rises in the east.
Thought experiment
written by VH, March 11, 2011 7:23
One way to look at this is to do the thought experiment that SocSec is mandated to *not* buy US T-Bill and instead must invest outside the US gov't.

Their cash flow obligations would remain the same. Would the US Gov't still have borrowed the same amount of money over the years and would people be claiming that SocSec is going bankrupt and somehow a contributor to the deficit?



...
written by skeptonomist, March 11, 2011 8:18
Social Security is included in the the number which is normally given in the media for "the deficit" - and which even Dean uses sometimes. Since the excess of income over outflow in SS makes this number more positive, incumbent politicians usually use this number. Anyone who refers to the "large surpluses" during the last two years of the Clinton administration is using this number. As Dean says, this number is the one from the the "unified budget", not the one which is added up to give the number for gross debt (the "on-budget" number). It is correct to say that SS does not contribute to the debt, but not that it does not contribute to "the deficit" as it is normally reported.

It will be interesting to see which deficit number politicians use once money begins to flow out of the Trust Fund. Since even the outs have generally used the more positive number (the one from the "unified" budget), I suspect they will all switch to the other one (the "on-budget" deficit) when it becomes more positive. Certainly the ins will switch to the on-budget number.
Dedicated social security tax
written by Greg, March 12, 2011 11:38
If this is going to be their position, there is no point in having a dedicated social security tax to pay for what is supposed to be the guaranteed retirement benefit of social security. Social security should be funded out of general tax revenues, then, and the regressive social security tax replaced with a more progressive tax.

Since the creation of social security, the idea was that people were paying into a retirement fund that they would then take money out of in retirement. The government owes this fund $2.2 trillion. Factcheck.org is pretending that debt does not exist just because it is internal to the federal government.
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written by y, March 12, 2011 1:36
Whatever your thoughts are about the government owing SS the money, the simple fact is that the government is running a huge deficit currently, and the deficit in SS cashflows will only make it worse. SS is increasing the deficit. Period.
Response to y above
written by Joe T., March 12, 2011 3:50
SS deficits do *not* make the $13T national debt worse. The SSA has $2.5T of securities counted in that $13T debt. When they cash in $45B in securities, it's a swap, cash for obligation. The $45B obligation goes away, momentarily reducing the national debt. I say momentarily, because the U.S. didn't get that $45B from a pile of surplus lying around. It needs to replace that $45B, by issuing new treasuries, say, to China or Prudential or Warren Buffet.

So we'll still end up with $13T debt. But SSA owns less of it and China/Prudential/Buffet owns more of it.

Those securities were bought by SSA with real money (yearly SSA surpluses), and are redeemable for real money, and are accounted for as real U.S. govt. obligations.

The SSA does business much like how a private annuity provider (e.g., an insurance company) does business: a) pays claims out of current receipts, b) invests surpluses for a rainy day, c) cashes in surpluses if claims are greater than receipts, and d) makes adjustments when future claims are projected to be higher than future receipts (e.g., homeowners insurance companies have gotten the U.S. government to liberally declare hurricane zones so they can increase rates or underwrite their way out of risky areas). Social Security needs adjustments. Social Security *will* increase the U.S. debt when it runs through its $2.5T surplus, and not before.
Has Law Changed? I Do Not Think So
written by PJR, March 12, 2011 9:55
H.R.5835
Omnibus Budget Reconciliation Act of 1990 (Enrolled Bill [Final as Passed Both House and Senate] - ENR)

SEC. 13301. OFF-BUDGET STATUS OF OASDI TRUST FUNDS.

(a) EXCLUSION OF SOCIAL SECURITY FROM ALL BUDGETS- Notwithstanding any other provision of law, the receipts and disbursements of the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund shall not be counted as new budget authority, outlays, receipts, or deficit or surplus for purposes of--

(1) the budget of the United States Government as submitted by the President,

(2) the congressional budget, or

(3) the Balanced Budget and Emergency Deficit Control Act of 1985.

(b) EXCLUSION OF SOCIAL SECURITY FROM CONGRESSIONAL BUDGET- Section 301(a) of the Congressional Budget Act of 1974 is amended by adding at the end the following: `The concurrent resolution shall not include the outlays and revenue totals of the old age, survivors, and disability insurance program established under title II of the Social Security Act or the related provisions of the Internal Revenue Code of 1986 in the surplus or deficit totals required by this subsection or in any other surplus or deficit totals required by this title.'.

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Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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