Outrageous Fear Mongering Takes Hold Of D.C. As Debt Ceiling Deadline Approaches


Monday, the government opened the season of its favorite sport: terrorizing the elderly and the infirm. 

Terrorism is the act of obtaining your goal by fear. Washington wants more money, so it threatens those who are weakest in our society. Two years ago, Obama played the game of "We aren't sure whether your Social Security checks will go out." This time it is Treasury Secretary Jacob Lew who sent a letter to Congress specifying that "the government wouldn’t have enough cash to cover Social Security payments, military personnel salaries, Medicare and other programs for an “extended period.” Basically, if you don't give us more money, we will shoot the old people.

It is bad enough that politicians routinely try to frighten the weakest element of our society. This is worse because of how little thought the politicians put into the threat. What should infuriate voters is that the government's threat here isn't serious, but the fear that it creates is.

There is a certain amount of comedy in Lew's threat because he happens also to be the managing trustee of the Social Security Trust Fund, a fund specifically designed to provide benefits at a time like this. It is the his job to ensure that the trust fund does its job. If there were any truth to his letter, he would be pleading the Fifth Amendment rather than sending a confession of stupidity to the prosecutor.

Lew may forgotten that he signed a letter to Congress a few months back that said the Social Security Trust Fund had enough cash by itself to pay benefits for more than three years (page 4). The latest figures show that the trust fund has roughly $2.8 trillion in assets. The only possible way that Social Security will not have cash sufficient to meet its bills for years to come is if the man running it is completely incompetent. 

But even if he is completely incompetent, the benefits of Social Security are supported by a portion of payroll taxes. If that revenue is not sufficient, the system can fall back upon the assets of the trust fund. The government can issue new debt for this trust fund, furthermore, because it is retiring the same amount of debt as it is issuing. This means that the rest of the government is screwed while Social Security is the one program that will continue to pay out.

Here is proof that reality is stranger than fiction. When Social Security has excess cash, it is required to invest it in government securities. Unfortunately, the government will not be able to issue more debt. So the cash would sit uninvested, while the rest of the government shuts down.

This isn't a Democratic problem. If it were, the GOP would be asking for Treasury Secretary Lew's resignation. There would some response. There isn't. In D.C., terrorizing the elderly isn't a bad thing, it is a means to an end.

It is time to remove politics from Social Security. The system needs an independent managing trustee who does not view the elderly and infirm as cattle to prod. The idea that Social Security might not have cash to pay benefits in October is meant to create fear in the elderly. It is despicable behavior.