Monday, March 11, 2013

No, Senator Johnson, You’re Not Entitled to Your Own “Facts”


Two items I read over the weekend prompted me to write this rant: the first was a piece about how people really aren’t “entitled to their own opinion”, if that opinion is counter to scientific, demonstrable fact; the second was a transcription of Senator Ron Johnson’s joust with Nobel Prize-winning economist Paul Krugman on one of the Sunday morning TV talk shows.

Perhaps the cliché should be changed to “everyone is entitled to their own delusion”, in the case of people who think the Earth is three thousand years old, that mercury in vaccinations causes autism, and any of a number of things – Michelle Bachmann and Sarah Palin seem to have an endless supply of them – that are counter to demonstrable fact.

And Senator Johnson really shouldn’t try to blow smoke past a Nobel Laureate in his particular field of expertise.  Here’s the gist: Senator Johnson made the claim that the Social Security Trust Fund is a myth.  Why he would say such a stupid thing is beyond me, when it’s obviously not true; but, be that as it may, this came up during a discussion of Social Security on a TV talk show.  When Senator Johnson uttered that nonsensical claim, Paul Krugman said “You said ‘let’s start with the facts’, but we’ve just run aground right there”.  To which Johnson said “Exactly my point – we have got to agree on facts and figures”.  Krugman responded “But your facts are false. Social Security has a dedicated revenue base, it has a trust fund based on that dedicated revenue base…it’s important to realize that the ‘facts’ being brought out here are in fact non-facts.”

Paul Krugman has his own opinions on economic matters, opinions which may or may not be “true”, such as his belief that paying down the nation’s debt is not as important right now as growing the economy, and that we can accomplish some of each at the same time.  That’s an opinion, not a fact. But at least it’s an informed opinion.

Senator Johnson’s assertion that the Social Security Trust Fund is a myth is simply not true.  Social Security is funded by two things: payroll deductions from the earnings of working people, and income from investments in government securities which the Social Security Trust Fund makes.

Senator Johnson is either ignorant of that basic FACT, or – he would like us to believe that somehow “the government” funds Social Securty – a basic UN-FACT.  That sort of assertion, false as it is, falls right in line with similar untrue statements from Johnson about how Social Security payments "add to the deficit".
 
You and I fund Social Security, and I probably fund a lot more of it than the average person, because I’m self-employed so I personally pay “both sides” of the FICA tax on my income - my portion, and the "employer's" portion.

Senator Johnson is entitled to his opinion that government is too large, too intrusive, and spends too much money.

But Senator Johnson is not entitled to state “facts” which are so untrue as to be absurd.  He does so at the peril of being perceived as a clown rather than a politician.

23 comments:

  1. The most recent strategy is to get the young and the gullible to believe that SS either doesn't exist or will go broke before the afore mentioned are eligible. That is the fastest way to erode support for any program.

    Here's my response to the benefit deniers. I say, "Great. Let's draw up a contract that says I get all your SS benefits when you retire. Since you think they are worthless or nonexistent, I'll give you $50 upon signing. Put your money where your mouth is."

    That offer is invariably met with much growling, guffawing and other name calling. I have yet to be taken up on my offer. Money talks and sh!& walks as we say in economics. My offer proves what these people are.

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    Replies
    1. Great tactic. I'm borrowing it the next time I'm drawn into a discussion with one of the deniers.

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  2. And Johnson is indicating he will run for another term in 2016. If the Democrats (or for that matter Republicans who are embarrassed by that empty suit) can't find someone in the next four years who can beat him, then truly the apocalypse is near.

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    Replies
    1. Amen. The WI Dems are like the national R's: no appealing candidate to run.

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    2. I think the election of Sen. Johnson is proof that being able to identify an appealing candidate three years out from the election is unnecessary. In 2007, who would have named Johnson as a credible candidate to run against Russ Feingold in 2010? For that matter, who saw him as a credible candidate when he announced his candidacy in 2010?

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  3. Johnson is half-right, although rhetorically he is absolutely correct.

    The trust funds run surpluses in that the amount paid in by current workers is more than the amount paid out to current beneficiaries. These surpluses are given to the U.S. Treasury (and thus become part of the general federal budget) in exchange for special U.S. government securities, which are deposited into the trust funds. If the trust funds begin running deficits, meaning more in benefits are paid out than contributions paid in, the Social Security Administration is empowered to redeem the securities and use those funds to cover the deficit.

    IOW, the "trust fund" is composed at least partially of Treasury IOU's which represent money taken FROM the "trust fund" by the Feds. The actual number could be $4.8Trillion (although the article is not clear on this point.)

    Source: http://en.wikipedia.org/wiki/Social_Security_Trust_Fund

    By the way, the same article states that the "trust funds" will be zeroed out in 2033, at which point SS taxes will only support 75% of promised benefits.

    So for Johnson to say that 'the trust fund is a myth' is rhetorically correct: in fact, the "trust fund" is a cookie-jar stuffed with Treasury IOU's, not hard cash, gold, or Twinkies. The money was, in fact, SPENT by the Gummint and all the "trust fund" got was a T-shirt signed by SecTreas.

    Still all comfy and snuggy with that?

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    Replies
    1. Very comfy; quite snuggy. Better a t-shirt than a tea bag.

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    2. OK. Just remember that the SecTreas is also a tax cheat.

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    3. So, you're saying the trust fund is a series of IOU's from the Treasury. Just like my bank account is an IOU from my bank.

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    4. Yup.

      But don't start giggling yet.

      In all likelihood, your Bank signed an IOU to the Treasury--and if it collapses, your deposits will be paid by the very same Treasury (FDIC cannot cover its bets, either.)

      Sleep tight!

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    5. I'm confused. I thought the trust fund was a myth.

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    6. You should be confused.

      That's exactly the aim of the DC gang--whether (R) or (D).

      Ron Johnson has the cojones to call it what it is: smoke and mirrors, and you don't like that. Well....

      Sleep tight!!!

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  4. Just for fun, here's a bit more:

    http://www.ritholtz.com/blog/2013/03/jpmorgans-internal-control-problems-or-hsbcs-got-nothing-on-us/

    JPMChase was (is) considered to be a "safe" Bank; Dimon did not want TARP moneys, according to the press.

    That's because Dimon knows that, under Dodd-Frank, JPMChase will not be allowed to fail. (You will recall that I fingered Dodd as a Significant Friend of the Banks.)

    Think Dimon's wrong? Consider Citi.

    The point: Treasury simply can NOT cough up the cash to bail out JPMChase and the other tottering BigBanks while at the same time paying off its notes to SocSec AND maintaining the spending spree demanded by Obama (and a number of silent partners in the (R) Party.)

    That's why I said that RoJo is 'rhetorically correct.' You can argue about technicalities if you like. Move a few deck chairs, too, if it makes you feel good....

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  5. Colonel,

    Oh, I understand the sarcasm, all right. I'm with Dad, though. The whole "trust fund" thing is based on excess money collected in payroll taxes that, by law, is lent to the government. So those Treasury notes are stacked in a little pile somewhere, ready to be redeemed when payroll taxes aren't sufficient to cover current benefits...which is right about now.

    And, as you and I and Dad get older and graduate to retiree status, the payroll tax shortfall will be greater; that is, more money will be required to be redeemed from the "trust fund" to pay full benefits to us future geezers.

    The "trust fund" payouts will come from, you guessed it, additional taxes on current workers. So those poor saps will not only be paying for current retirees with their Social Security payroll taxes, but they'll be on the hook to make up the "trust fund" shortfall...which went long ago to Congress to fund fur-bearing trout farms -- to steal a neat turn of phrase from P. J. O'Rourke.

    SOMEBODY is going to get tired of paying twice for Social Security benefits for other people.

    The Town Crank
    Neenah

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  6. Colonel,

    Oh, and I love the "Nobel Prize-winning" epithet for Mr. Krugman..."love" being sarcasm, eh?

    I will never forget that Krugman was the guy who wrote in the New York Times on September 14, 2001: "Ghastly as it may seem to say this, the terror attack -- like the original day of infamy, which brought an end to the Great Depression -- could even do some economic good." The most awesome swallowing -- hook, line, and sinker -- of the broken window fallacy that has ever been put forth as serious economic thought.

    What guys like Krugman never seem to examine is this: if it's possible that the destruction of the World Trade Center produced economic good, why not bomb the Empire State building or the UN, or Wall Street?

    Heck! During the next economic downturn, we could just blow up a city and like magic we'd have an economic miracle!

    I consider Krugman to be entirely unreliable as an economic prognosticator because of his idiocy with respect to 9/11.

    The Town Crank
    Neenah

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  7. Heck! During the next economic downturn, we could just blow up a city and like magic we'd have an economic miracle!

    Well, if it were Washington, DC, you might have something there....

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    Replies
    1. No argument from me, Dad!

      The Town Crank
      Neenah

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