- The Washington Times - Saturday, September 15, 2001

Did you see what the American Association of Retired Persons said about the Democrats' wildly irresponsible accusations that the Bush administration is raiding the Social Security trust fund?

You probably didn't, because the nightly network news shows in recent weeks have been effectively feeding or repeating the very same charges, without rebuttal, in their news reports.

What the AARP said Monday is that these charges are absolutely false. And they called on the Democrats to stop saying it.

"No one is raiding the trust fund," said Martin Corry, director of federal affairs for the AARP. "What happens when people hear that the trust fund is being raided, they literally think that money is being taken away from Social Security or taken away from Medicare. That's not the case."

The charge that the administration is "dipping into the Social Security trust fund," which Democrats like House Minority Leader Dick Gephardt, Senate Majority Leader Tom Daschle and Senate Budget Committee Chairman Kent Conrad have turned into a mantra for their party, has no basis in fact. But it is repeated again and again to stir up fear and anger among people on Social Security or nearing retirement against President Bush.

There is no trust fund put aside somewhere. Money from the Social Security payroll tax, paid by both employees and employers, flows into the U.S. Treasury and it is spent.

In the past, this payroll tax revenue — more money comes in than is necessary to pay retirement checks and other benefits — has been used to pay the government's bills. The feds credit the Social Security system with an interest-bearing IOU for the use of this money and those IOUs are backed by the full faith and credit of the government.

As you can imagine, there are trillions of dollars in IOUs that will be redeemed by the Social Security administration at some future time when the system needs the money, as it will in about 15 years when demands for benefits will begin exceeding the system's cash flow.

More recently, the payroll tax surplus has been spent to pay down the publicly held debt on the theory that when the federal government needs more money to meet the Social Security program's future costs, it will be in a better financial position to borrow what it needs to cover its benefit checks. In this case, too, the government gives the program IOUs in exchange for the money it is using to reduce the debt.

In other words, either way this so-called "trust fund" — which really is the totality of all those IOUs — isn't affected one iota.

"The borrowing that goes on has to occur in any case — either Social Security buys down the publicly held debt, or it lends to government the money for purposes of current consumption," Mr. Corry said this week.

"In any case, it receives a credit. It's backed by the full faith and credit of the federal government," he added.

"So in reality,[using Social Security surplus dollars] doesn't affect the trust funds one way or the other. They still get the full credit that they are due; benefits are paid exactly as they're supposed to," he explained.

It should be noted that the AARP, the nation's largest membership advocacy group, is hardly an ally of the administration in its efforts to reform Social Security. Their latest criticism of the Democrats' tactics suggests that AARP officials believe Democratic leaders have gone too far, needlessly enflaming fears among AARP members and the nation's elderly at large.

Nevertheless, the Democrats continue to play up this charade about raiding Social Security or "dipping into Social Security." Why?

Because fear and demagoguery are very powerful and potent political weapons and the Democrats hope they can use this tactic to destroy public confidence in the administration's tax cut policies. Another equally ludicrous charge is that the tax cuts are causing the economy's downturn, which isn't supported by a single economist anywhere.

Why are the Democrats playing this card? Fearmongering on Social Security has worked for them in the past and they believe it can work for them again and help them take back the House and expand their slender one-vote majority in the Senate.

But the fact of the matter is that the Democrats do not have an economic recovery plan of their own. Instead, they are proposing that the administration's fiscal 2002 budget should be "revisited," a code word for repealing the tax cuts and for increased government spending.

That would be a return to deficit-fixated, Hoover economics that would be a fiscal disaster for this country. The goal of economic policy must be to grow the economy, not to grow the government. A thriving, full employment economy is what produced the tax surpluses in the first place.

Donald Lambro, chief political correspondent for The Washington Times, is a nationally syndicated columnist.


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