The Therapy Sessions
Tuesday, June 15, 2004
Social Security finances brighten a bit.
A report said the funds would run out in 2052, 10 years later than thought. Democrats assailed Bush's overhaul plan.
Why does anyone take the CBO seriously anymore? A year and half ago, they were saying this:
The difference between the income and expenditures credited to the trust funds of the Social Security and Medicare programs, the nation's two largest social insurance programs, is often viewed as a measure of the impact that those programs have on the financial condition of the federal government. Under the Congressional Budget Office's latest budget projections for the next 10 years, those trust funds are estimated to run sizable surpluses. However, those surpluses reflect more than an excess of dedicated revenues over spending. A substantial portion results from internal transfers between Treasury accounts--credits from the general fund of the Treasury to the trust funds. Thus, although the trust fund surpluses may accurately reflect the programs' spending authority, using them to gauge the programs' budgetary impact distorts their net effects.
That distortion, which is large, obscures the growing strains that the programs are placing on the government's finances. When the intragovernmental transfers are excluded, instead of running a combined surplus of $3.3 trillion over the next 10 years, the two programs are expected to run a deficit of $96 billion. Similarly, from 2003 to 2026, instead of running a cumulative surplus totaling $6.5 trillion, as estimated by the Social Security and Medicare trustees, the programs would run a cumulative deficit totaling $6.6 trillion.
I have simply lost count of how many times the CBO has been wrong. Budget deficits, cost overruns, program growth, budget growth, economic growth - all wrong, repeatedly.
Any economist with their track record would have been fired a long time ago.
The Federal government should have an INDEPENDENT auditor.
I trust the generally more accurate and dispassionate assessments of the Economist, which has a much better track record:
The American government's accounts look about as reliable as Enron's
IN BUSINESS, the penalties for poor book-keeping can be severe. The first principle of accounts is that they should present, as far as possible, a fair and accurate picture of an organisation's financial position. That means not only reporting a year's income and expenditure, and listing current assets and liabilities, but also setting out future obligations and sources of revenue. Executives who ignore these precepts risk being hauled before the courts for deceiving investors. Yet for all the vigour with which America's politicians have denounced the country's recent corporate scandals, it is not clear that the government's books are any fairer or more accurate than Enron's.
Congress had fits that nobody was watching what Enron was doing. But they are doing far worse, with the country's future, using federal money to buy votes.
But the CBO's assessment will be taken as the "last word," and the government will use it as an excuse to whistle while the problem grows worse.
Then they'll be shocked when the situation turns out to be worse than thought.
It is so utterly predictable.
UPDATE: Andrew Cassel weighs in: Social Security's numbers don't lie:
Uh-oh. The latest look at the future of Social Security says we face a looming crisis. According to the Committee for a Responsible Federal Budget, the new report confirms the 'Need for Changes' - and soon, before the baby boomers begin retiring.
No, wait. We can relax. A new study says we're in better shape than we thought. 'Social Security Solvent for Fifty Years,' the Center for Economic and Policy Research proclaims.
How can there be two studies with such contradictory conclusions? There aren't. There's only one. And it's quite clear and straightforward.
It's the spin, coming from both the left and the right, that can give you mental whiplash.