Oh Look, Paul Ryan Lied About Something
Are you done yet? Did you read all eight gazillion pages of the Ryan Budget, or did you stop after the first few lines and pleasure yourself thinking about his dreamy biceps? Well, we didn’t read it all either because we were distracted by whiskey. And his biceps. But luckily other people read it and managed to find (SPOILER ALERT) some big ol lies in it, especially as they relate to Social Security and the Olds.
Haha, that’s not a spoiler alert -- of course there were lies in his budget. Let’s get our wonksplanation on and figure out how Paul Ryan is trying to screw the Olds, and the rest of us.
As we have noted before, you get what you pay for here at Wonkette. And we are not Social Security experts. But LA Times business writer Michael Hiltzik is, and he has some thoughts about the Ryan budget:
There should be a rule--or even a law--that politicians who propose "fixes" to Social Security should at least show they know something about the program. By that standard, House Budget Committee Chairman Paul Ryan, R-Wisc., would flunk.
What's worse, his misunderstandings--heck, let's go ahead and call them misrepresentations--are aimed at taking your money.
If you haven’t been living in a cave recently, you know that Paul Ryan came out with his new budget. And you also know that the budget has no chance of having any impact whatsoever because of the 2-year budget deal that Ryan and Sen. Patty Murray reached a few months ago. So really, this is a giant exercise in futility, paid for by your tax dollars. Yay democracy! But let's read it anyway, for funsies and to learn about what Ryan really thinks.
In his budget, Paul Ryan is trying to scare the Depends off the Olds by shaking his fist at Social Security.
"Any value in the balances in the Social Security Trust Fund is derived from dubious government accounting. The trust fund is not a real savings account. From 1983 to 2010, it collected more Social Security taxes than it paid out in Social Security benefits. But the government borrowed all of these surpluses and spent them on other government programs unrelated to Social Security. The Trust Fund holds Treasury securities, but the ability to redeem these securities is completely dependent on the Treasury’s ability to raise money through taxes or borrowing."
Wow, Ryan managed to hit a bunch of conservative g-spots in this one. From “dubious government accounting” to “raise money through taxes,” we are sure he made Dead Breitbart’s Caged Animal Reagantorium rise up and give the ol’ one-eyed salute. This sure does sound scary. It would help if we had a more thorough understanding of how Social Security actually works. And whiskey. Whiskey always helps also, too. But we’ll settle for an explanation.
From 1983 on, the payroll tax was increased to produce more revenue than was needed to pay benefits each year. The idea was to build up a reserve to cover the coming wave of baby boomer retirements; in effect, the baby boomers have been pre-funding their own old-age benefits.
Hey, that was a smart idea. We think that happened when Reagan and Tip O’Neil were buddies and smoking cigars and making back room deals and stuff, but we were too lazy to fact-check it, so just take our assumption for it. Anyway, it seems like a good idea to save that money. Is that what we did? Or did the government splurge on hookers and blow like certain bloggers we know?
The money has been invested in U.S. Treasury securities, just as you might do by purchasing Series EE savings bonds, or TIPS. Why do people invest in T-bonds? Because they're the safest securities in the world. The U.S. has never, ever defaulted on them (although the Tea Party wing of the GOP seems to think that would be a good idea). The money isn't invested in corporate securities or anything else, because Congress hasn't allowed that.
The Social Security trust fund's bonds are backed by exactly the same commitment of the U.S.' "full faith and credit" as any other Treasury security. Keep your eye on that ball, because Ryan is going to try to palm it.
To be honest, we don’t understand all of that. But we generally understand that the government used the increased payroll taxes to invest in Treasury Bonds, which are safe except when the Tea Party wants to make the government default because the Tea Party is full of radical idiots. But the problem is that buying a Treasury Bond is like giving money to the government now in return for money plus interest later. The government is using said money to pay for things like roads, schools, foreign wars over oil, tax breaks for the wealthy, and national parks. So Social Security is just like a fairly conservative investor who just wants to make a little bit of interest on money, but not play the stock market or bet on the ponies. Got it?
If you understand that much, reward yourself with a shot of whiskey -- but don’t drink until we are done, because we are getting to the good part.
Ryan is saying that the money ain't there. And never will be there, maybe? Help us put the pieces together, smart LA Times guy.
So, to put all these pieces together, there's no "dubious government accounting" involved here--the dubious accounting is all Ryan's. The trust fund is indeed a real savings account, involving deposits and interest. Yes, the government borrowed the money, and it has paid interest on it every year (duly recorded and published, down to the last dollar, in the annual reports of the Social Security trustees).
Phew. So we know how much Social Security monies we have. So what’s the problem? We workers (yes, bloggers count so SHUT UP) pay our payroll taxes, which are invested in Treasury Bonds so we can get a little interest on the monies. It sounds like Paul Ryan doesn’t want to pay back Social Security for the Treasury Bonds it bought from 1983-2010. That can’t be right, can it?
The most important factor is the one that people like Ryan want you to forget: The money in the Social Security trust fund came directly or indirectly from the payroll taxes paid by millions of American workers--100% of it. It was paid by workers in the trust that the government would pay it back. Paul Ryan is hinting, pretty strongly, that he doesn't want to pay it back.
Hey, that’s pretty shitty, Paul Ryan! We don’t care how dreamy your biceps are, don’t go claiming that we can’t honor Social Security payments because GWB and Republicans in Congress decided to lower taxes and borrow money to fight two wars that lasted longer than a decade and then the economy collapsed because of slack government oversight championed by Republicans in Congress and we had to have a stimulus to make sure we didn’t have Great Depression Part II. Also, we learned that the government has to honor the Treasury Bonds because of full faith and credit, so don't go defaulting or the Olds will have to resort to cat food and when we get old we won't be able to afford the internet and won't be able to forward vaguely racist emails to our entire extended family, which is a god-given right of all old people.
Ok, class dismissed. You may now have your whiskey.
Follow DDM on Twitter (@Wonksplainer), because he would never lie to you, baby.