Tuesday, March 23, 2004
UPI Blows It: Social Security
Looks like someone at United Press International needs to go back to school on the Social Security system.
From this article, headlined "U.S. social security system going broke:"
Snow said the program's cash flow will be in the red in 2018 and the program's money will be exhausted in 38 years and "neither of those dates have changed since last year's report.
What the reporter missed:
The fact is the U.S. Social Security system doesn't have any money. All it has is enough to pay immediately payable benefits to retirees.
Yes, the Social Security system runs a surplus. They take in more money than they need to pay immediate bills. So what do they do with the excess? Why, they do the only thing the law allows them to do: they buy Treasury bonds.
And what happens to the money?
It goes to the U.S. Treasury. Where Congress spends it. They have to spend it. It's the law.
So the Social Security system simply holds a fist full of Treasury bonds. The money is gone.
So the problem is more immediate than the article suggests. The American people do not have 38 years to solve the problem. They have only 14 years. After that point, any shortfall will have to be paid out of the general fund--exactly as if the Social Security system had no assets at all.
Granted, it's not clear if the "program's money will be exhausted" construction is the reporter's doing, or if he's paraphrasing Snow. If Snow said such a thing, though, the reporter should have called him on it.
But it seems more likely to me that the reporter (and the editor who's supposed to mentor and develop him) just doesn't understand his beat.
The topic is going to smash us over the head in the coming years. If Bush wins a second term, Social Security privatization may well be a huge issue in 2005 and 2006. Especially if stock returns are strong.
We're going to need better from our journalists.
Splash, out
Jason
From this article, headlined "U.S. social security system going broke:"
Snow said the program's cash flow will be in the red in 2018 and the program's money will be exhausted in 38 years and "neither of those dates have changed since last year's report.
What the reporter missed:
The fact is the U.S. Social Security system doesn't have any money. All it has is enough to pay immediately payable benefits to retirees.
Yes, the Social Security system runs a surplus. They take in more money than they need to pay immediate bills. So what do they do with the excess? Why, they do the only thing the law allows them to do: they buy Treasury bonds.
And what happens to the money?
It goes to the U.S. Treasury. Where Congress spends it. They have to spend it. It's the law.
So the Social Security system simply holds a fist full of Treasury bonds. The money is gone.
So the problem is more immediate than the article suggests. The American people do not have 38 years to solve the problem. They have only 14 years. After that point, any shortfall will have to be paid out of the general fund--exactly as if the Social Security system had no assets at all.
Granted, it's not clear if the "program's money will be exhausted" construction is the reporter's doing, or if he's paraphrasing Snow. If Snow said such a thing, though, the reporter should have called him on it.
But it seems more likely to me that the reporter (and the editor who's supposed to mentor and develop him) just doesn't understand his beat.
The topic is going to smash us over the head in the coming years. If Bush wins a second term, Social Security privatization may well be a huge issue in 2005 and 2006. Especially if stock returns are strong.
We're going to need better from our journalists.
Splash, out
Jason
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