Sen. DeMint's Transparent Trust Fund Flip-Flop
If you asked Sen. Jim DeMint (R-SC) how he felt about the Social Security Trust Fund in 2009, he would have told you that it doesn't exist — that it's "not so much a myth as it is a lie," as he wrote almost two years ago:
This week, the Associated Press reported that for the next two years, the Social Security system will pay out more money than it takes in. The story contained the following bizarre formulation: "The deficits -- $10 billion in 2010 and $9 billion in 2011 -- won't affect payments to retirees because Social Security has accumulated surpluses from previous years totaling $2.5 trillion. But they will add to the overall federal deficit." How can it be that Social Security has $2.5 trillion in reserves, but that a mere $19 billion shortfall will add to the federal deficit? Because the "surpluses" do not exist. The Trust Fund is empty and has been for years. There is no money in there; just IOU's. That's why the 2010-2011 shortfalls will add to the deficit -- we don't have the money. The very concept of a Social Security Trust Fund is not so much a myth as it is a lie. For decades, Congress has raided the Trust Fund to pay for other government programs and used accounting gimmicks to hide the true size of the deficit.
Ask him about the Trust Fund again today, and apparently you'd get a very different answer. Here's DeMint yesterday on Fox News, touting the fund's solidity in order to attack President Obama as a liar:
DEMINT: Well we're not gonna default. And we're gonna pay Social Security and Medicare. We have those trust funds that can be converted to public debt if we need to to cash out. That's not ideal, but we're gonna make our Social Security and Medicare payments.
NEIL CAVUTO (HOST): So when the president said, Senator, two weeks ago that those payments, Social Security, Medicare payments...are in jeopardy if we haven't raised this, you say that's hogwash?
DEMINT: That is hogwash, and the only way they're not gonna get paid is if the president decides not to pay 'em for political purposes, because the resources are there.
What a difference 21 months make. Suddenly the fund is so solid, so reliable, that Obama's warning that "I cannot guarantee that those checks go out" if we pass the August 2 deadline is "hogwash."
A report from the Bipartisan Policy Center (BPC) on what happens after August 2nd supports Obama's statement and makes DeMint's certitude look like political posturing. "There is no precedent," the report says on Page 8, because "all other debt limit impasses have been resolved without passing the X Date" when Treasury runs out of options. The associated BPC press release says that the day-to-day differences in incoming and outgoing money mean that "the government could find itself unable to make a $23 billion Social Security payment that has to go out that day." Independent fact checkers at PolitiFact agree that "no one knows for sure" what would happen with benefit checks.
If Republicans do go all the way and force a default crisis, there is only one absolutely certain outcome: Our credit rating will be trashed and the economy will suffer. While it's somewhat amusing to see Jim DeMint reverse himself on the Social Security Trust Fund now that it's politically convenient for him to acknowledge that it's a real funding stream, there's nothing funny about his apparent eagerness to put our economic recovery to the sword.