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Karl Rove's Latest Lies About Social Security

Reported by Melanie - March 16, 2005

The Bush administration appears to be ramping up its push to "fix" Social Security as Karl Rove made the rounds on television today (March 16, 2005). Ron Insana interviewed him on CNBC and he appeared with Neil Cavuto on Your World w/Neil Cavuto this afternoon.

The most interesting part of the two-part segment was Rove's explanation of how Social Security works.

Here's what Rove said:

"People think there is an account with their name on it." That's "not how it operates." It's not a "big pot of money." It's pay as you go. The "so called surplus" is "borrowed by the rest of the government and spent, and in return, Social Security gets a piece of paper that says the other part of the Federal government owes the Social Security trust fund this amount of money plus a very modest amount of interest, to be paid at some future date. Those pieces of paper are kept in one drawer of one file cabinet in Parkersburg, West Virginia." It's "about a trillion five in promises from one part of government to the other part of government.

"In 2008, three years from now, payments into the Social Security trust fund, the surplus, those peak and begin to decline. By 20l8, the surplus, we're no longer paying in more than we're paying out. We then, in 20l8, begin to pay out more and draw down the surplus. By 2042, that so called surplus is exhausted and the system is bankrupt."

Continuing, Rove said, "Between 20l8 and 2042 we gotta redeem all those notes that are in that file cabinet in West Virginia and what that means is in the first couple years Congress is going to have to find some $3 billion, $8 billion, $10 billion, but that amount escalates rapidly." By "2027 it's $200 billion that Congress is going to have to come up with in order to pay the promises and repay those pledges."

Rove said we "have a nearly $l0.4 trillion obligation in Social Security that we're going to have to pay. Doing nothing means that you've gotta come up with $10 trillion. And what we've gotta do is find reforms that allow us to bring the promises back into balance with what we can pay and then we've gotta have personal retirement accounts so younger workers have the option of taking some of their money, putting it in the market, and getting a better rate of return."

Rove said if we raise taxes today, "through the payroll tax," and we said "we're gonna raise it just the amount necessary to pay the promise the government has made, that we don't see the money in the bank for," the "average family of four would pay $l,400 more a year in taxes." Rove said that sum would have to be "matched by $l,400 from their employer" so that would amount to "$2,800 a job in America." He said "if you don't think that could be done without harming job creation and the economy in America, you know, you're kidding yourself."

Comment: So some clerk somewhere gathers the "pieces of paper" and tosses them into "one drawer" in "one filing cabinet" in West Virginia huh? What an image!

Here's a short Paul Krugman piece on the Social Security "crisis." In it, Krugman says:

"The grain of truth in claims of a Social Security crisis is that this tax increase wasn't quite big enough. Projections in a recent report by the Congressional Budget Office (which are probably more realistic than the very cautious projections of the Social Security Administration) say that the trust fund will run out in 2052. The system won't become "bankrupt" at that point; even after the trust fund is gone, Social Security revenues will cover 81 percent of the promised benefits. Still, there is a long-run financing problem."

Here's a link to the Congressional Budget Office and its June, 2004 report titled, "The Outlook for Social Security."

And here's a link to OurFuture.org. The headline there today is: 50 Senators Vote Against Bush Privatization Scam.

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