MSM, Not everybody gets it!!!!

After giving the main stream media credit for telling the truth about Social Security based on a New York Times editorial I have to step back. Brad DeLong reminds us that not everyone gets it. Jonathan Weisman is pushing the administrations lies and fabrications on the Social Security "crisis" in the Washington Post. Delong quotes Brad Setser

The initial framing of Weisman's article is just way, way off. Social security in no way faces a day of reckoning in 14 years, as Weisman implies. Rather than taking the Administration's talking points seriously, the press should simply highlight how ridiculous they are.

Consider the following example: Suppose I bought a 15 year treasury bond that matures in 2020. The Treasury does not sell 15 year bonds, so this is a bit of a thought experiment. Do I have a problem in 2020? Do I face a day or reckoning in 2020?

Of course not. I have a financial asset. I am better off in 2020 than I would have been had I not bought the bond.

Social security expenditures will exceed its payroll tax revenues in 2018. So what? Social security has built up assets over time, since from the 80s on payroll taxes have exceeded social security benefits. It bought a lot of US government bonds with its surplus. Social security can sell some of its assets to cover the gap between its expenditures and its revenues. That is the point of saving -- it lets you spend in excess of your income in the future. The Trustees forecast those assets will last til 2042, using VERY conservative assumptions. The CBO forecasts those assets will last until 2052 [Corrected, Brad -- I initially eyeballed the graph, instead of looking at the text, my apologies]. That's pretty good.

Unless the US treasury cannot make good on its promises -- something that truly would change international financial system -- social security does not face a day of reckoning in 2018. When a bond you own comes due, you have the right to redeem it -- or in the case of social security, at least to collect the interest on your bonds (remember that right now social security is both taking in $68 billion more from the payroll tax than it spends on benefits and is lending the $85 billion interest it recieves on its existing holdings of bonds back to the rest of the government ... in total, social security is providing over $153 billion in financing to the rest of the government)

As Brad Delong says "Why Oh Why Can't We Have a Better Press Corps?".