Obama's Budget Director Explains Why You Shouldn't Trust the Social Security Trust Fund
"These [trust fund] balances are available to finance future benefit payments and other trust fund expenditures—but only in a bookkeeping sense. These funds are not set up to be pension funds, like the funds of private pension plans. They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures. The existence of large trust fund balances, therefore, does not, by itself, have any impact on the Government's ability to pay benefits." [bold added]
Lew wrote that in 2000 in his role as President Bill Clinton's budget chief. Sadly, since taking the budget director job with the Obama White House, he's decided that Social Security ain't so bad for the budget after all. Here's how he explained the program's effect on the budget in USA Today last month:
Social Security benefits are entirely self-financing. They are paid for with payroll taxes collected from workers and their employers throughout their careers. These taxes are placed in a trust fund dedicated to paying benefits owed to current and future beneficiaries.
Lew knows the trust fund is an accounting fiction. He knows that the money doesn't really exist and that any assumption that it does also requires one to assume tax hikes, borrowing (i.e. delayed tax hikes), or counterbalancing budget cuts. But the Obama administration doesn't want to admit this, so they've tasked Lew with selling the fiction as truth.
In Obama's early days, the president's first budget director, Peter Orszag, told The New York Times that "the president prefers to tell the truth, rather than make the numbers look better by pretending." He promised that the Obama White House would put an end to budget gimmicks. But that sure didn't happen under Orszag, and it doesn't appear to be happening under Lew. Instead, Obama has shrugged off the debt problem and installed two consecutive budget directors whose job seems to be to mislead the public about the budget.