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If there were ever any doubts that “Fox on 15th Street” was a fitting label for the Washington Post, Patrick Pexton, the paper’s ombudsman removed them with his defense of the Post’s front page piece on Social Security last Sunday. Just to remind readers, the whole premise of that piece, as expressed in its headline, is that Social Security has crossed some “treacherous milestone” because it had gone “cash negative earlier than expected.”
While this assertion was presented in a sensationalistic manner in the Post, as both the headline and the lead, it is actually not true. Social Security has not gone “cash negative” in the sense that the trust fund is still growing. While current benefit payments exceed designated Social Security tax revenue, the income to the system, which includes interest on its holdings of government bonds, still exceeds benefit payments.
In this sense it is simply wrong to say that the system is cash negative. More money is still coming into the system than is going out. Obviously the Post meant to say that benefit payments exceed tax revenue, but tax revenue is only part of the income for the program. It is a serious failure by the Post to ignore the income stream from interest payments, which is compounded by the failure of the ombudsman to recognize this failure.
This is really not something that is arguable — Social Security has a stream of income from the interest on its bonds. The Post and its ombudsman may not like this fact, but it is nonetheless true.
The ombudsman also chose to ignore several misleading or false claims that the Post used to advance its Social Security crisis story. For example, the original piece told readers that “the payroll tax holiday is depriving the system of revenue.” This is not true. Under the law, the Social Security system is fully reimbursed for the money not collected as a result of the payroll tax holiday.
The piece also claimed that Senate Majority Leader Harry Reid was wrong when he claimed that Social Security was not contributing to the budget deficit. In fact, under the law Social Security has a separate budget that is not part of the on-budget budget. The program can only spend money from its own trust fund, which is money raised through designated taxes or the bonds purchased with this tax revenue. For this reason, it cannot legally contribute to the budget deficit. Presumably the Post and its budget reporter (and its ombudsman) are aware of this fact, but rather than clarifying the issue it chose to take a swipe at Senator Reid for defending Social Security. (The payroll tax holiday put in place for 2010 is arguable an exception to this.)
If the purpose of the piece was to inform readers rather than to raise fears, it might have been useful to put the projected Social Security shortfall in some context so that readers could evaluate the size of the problem. The most recent projections from the Congressional Budget Office put the shortfall over the program’s 75-year planning period at 0.58 percent of GDP (exhibit 5). This is just over one-third of the increase in the size of the annual defense budget since the pre-September 11th period.
Alternatively, the Post could have told readers that the projected shortfall is approximately equal to one-tenth the size of the upward redistribution from the bottom 99 percent to the top 1 percent over the last three decades. These or other comparsions would have been made readers better able to assess the size and implications of Social Security’s long-run problems.
There are many other problems with the article that are not worth repeating here. (Here is the original blogpost.) Clearly the ombudsman was intent on exoneration rather than a serious examination of the issues raised by the piece and its critics.
However what is perhaps most disturbing is how the ombudsman seeks to settle the issue. He tells readers:
“I spent a couple of days last week talking to Social Security experts across the ideological spectrum. Some, mainly those on the left, didn’t like the story, while those on the right did. But some in the middle, like Jonathan Cowan of the Third Way, declared it realistic and on point.”
It is not clear what standing Jonathan Cowan (an English major at Dartmouth college) has to settle this issue other than fitting the Post’s definition of being in the middle. One need not have a PhD in a policy field to take part in public debate, but being in the middle of the political spectrum (by the Post’s standards) does not make one expert on an issue.
And in fact, there are many situations where the truth most definitely does not lie in the middle (e.g. the Civil War). The Post’s ombudsman has substituted finding the middle ground for finding the truth. This might be the way the Post conducts itself, but it is not the way a serious newspaper carries through its business.
22 Comments
Dean, you give the wapo way to much slack to say “Obviously the Post meant to say that benefit payments exceed tax revenue.” The whole thing is a scare piece as is usual with SS items in the msm. The assumption is that there can be no adjustments to the FICA tax, so the resources will decline without any hope of getting back to a fair amount (e.g. raising the income cap). These stories are always meant to obfuscate, scare, and confuse; they are NEVER meant to clarify the situation.
“treacherous milestone”
Besides being clownishly sensationalistic, it also happens to be untrue. Why am I not surprised?
I’ve been hearing the “cash negative” meme floating around in the mainstream ether lately. Well lower the lifeboats and start rowing! Hired fools and useful idiots.
Hey Pete Peterson & Fellow Travelers: “Treacherous milestone” this.
Thanks to the growing ties between the Weymouth and Murdoch philosophies of lie about everything and sort it out with more lies if you get caught, seems to be getting deeper and deeper.. WaPo has turned into a tabloid and the handful of rational journalists that still work over there are hopefully looking around for ways to get out as quickly as possible.
Paxton: ” those on the left, didn’t like the story, while those on the right did.”
He unawarely confesses that what matters is ‘liking’ or not, accuracy apparently does not merit concern.
If he were just a little honest he would admit that his superiors ‘liked’ the story and that is what really counts.
One wonders how low they can go.
Did you see Fred Hiatt’s ridiculous attack on the “thuggish” AARP because they have the gall to fight his Pete-Peterson-inspired efforts to starve them and us?
I defy Hiatt to name one thing AARP has done that outdoes Alan “300 Million Tits” Simpson in the “thuggish” department.
Somewhere in Hell, Deborah Howell is smiling.
the post is simply doing their puppet master’s bidding, they are all on board, including the democrats I might add, they want the social security funds to be transferred over to the wealthy and they are trying to get everyone on the same page making the false case so people follow their judas sheep to slaughter
WAPO, its getting harder and harder to distinguish between them, the Examiner, or the New York Post. A once proud example of journalism turning itself into an irrelevance on par with the National Inquirer. Sad and pathetic.
The whole SS issue boils down to one thing: redeeming the bonds in the Trust Fund.
If you redeem them, as scheduled, as planned, then SS is fully funded through its first century (and how many programs or even businesses endure that long?). After that adjusting the ceiling on income subject to the payroll tax keeps the plan solvent.
If you insist on rolling them over, defying the plan, then your payments are limited to then-current tax revenues (plus interest), and you have a shortfall, which you would have to address with higher payroll taxes or reduced benefits.
If you redeem the bonds, as scheduled and planned, the money has to come from somewhere. This was the “lock box” that Gore talked about in 2000. If you are running a budget surplus (remember those?) and paying down the national debt, you free up room to issue new general budget debt to redeem the SS trust fund debt, or simply earmark the surplus to redeeming SS debt.
Without an existing surplus, your options are to increase general fund borrowing (increasing the deficit on paper, as you move debt from off-budget to on-budget) or to raise taxes.
The problem is that our Congress does not regard debt as something to be paid off. There is no provision in the budget to retire debt. Paying off debt is not regarded as a budget item, and rolling over debt is not considered new borrowing.
That was a ridiculous article by Wapo.
Isn’t it true as well that the gigantic surplus created under the Reagan admin in the early 80′s by raising the payroll taxes was prepayment for the boomers’ retirement?
And isn’t that surplus designed to be paid down as the boomers retire?
I believe that SS for the most part pre-Reagan has always run small surpluses, and the depletion of the present huge surplus was envisioned to return SS back to those small surplus days, basically functioning on its original premise of pay-as-you-go.
Also, I don’t believe the depletion of the boomers’ preretirement surplus has anything to do with the projected shortfall 25 yr. from now. That shortfall can be corrected entirely with a very modest increase in the payroll tax and/or some lifting of the cap.
The problem is that our Congress does not regard debt as something to be paid off. There is no provision in the budget to retire debt. Paying off debt is not regarded as a budget item, and rolling over debt is not considered new borrowing.
now that’s interesting
Thank you for pointing out that the so-called expert on social security accounting was an English Major from Dartmouth (and no doubt a legacy hire at the Third Way. I don’t fault guys like him for spouting bullshit; it’s what he gets paid for. But you have to ask what kind of a degree the omsbudsman has? Journamalism? Which school, and with what honours? Or is he another legacy hire? What did he do before he went into omsbudsing?
This whole business has become a nesting place for second-raters who probably got their job through family connections. God knows, Fred Hiatt and Chip Sulzberger did. It’s the Republican way.
Rolling over debt is not new borrowing in the sense that it does not add to the size of the deficit (other than accumulating interest). As to paying it off, there is a demand as well as a supply of government debt. If the economy is growing fast enough relative to the growth in the stock of debt there will be enough demand for it to be held at normal interest rates, since the capacity to pay that interest rises as income rises (assuming stable tax rates). The problem that has emerged is that the tax rates have fallen massively thanks to Bush and now Obama. We are still a long way from debt unsustainability, and as long as the Fed is around it can always be monetized in a pinch.
Pundit and Ompologist $trapped to The WA$HPO$T!
There is no acceptable middle between the bat-shit crazy and the duplicitous. They are both off in the ozone, one just a bit farther than the other and the middle is still fucked up.
Just occurred to me that an asteroid the size of a large aircraft carrier is passing by within the Moon’s orbit. I can think of a bunch of bozos, including the WAPO Ombudsman, who should be assisted to catch a ride.
Buh bye.
See you, wouldn’t want to be you.
The middle of the road is where you get runned over.
Come on, Dean. Everyone knows that the truth has a leftward bias. How’s a responsible journalist going to do balanced reporting, if all they report is the truth? This was a balanced article. We even have the word of an unbiased centrist with a degree from Dartmouth assuring us that the author achieved journalistic balance. They bent over backwards, and all the thanks they get is to be accused of unprofessionalism by Dean Baker at FireDogsLake, or whatever they’re calling themselves now. /s
My favorite example on truth vs. centrist is slavery before the Civil War. Say it’s 1850, there are three groups on the slave question. The right-wingers would growl “Leave our ‘peculiar institution’ alone!” Left-wingers would say “Abolish slavery with no compensation to the slave-owners, NOW!” The centrists would probably cite Uncle Tom’s Cabin “Now, the slave-owners mustn’t be as bad as those masters were.” Remember, regulation of commercial businesses had to wait until a few decades later, when the Progressive Era got started, so even the idea of regulating slavery was out of the question.
We know of course, with the benefit of hindsight, that the lefties were absolutely and unreservedly correct. Are lefties always correct? No, progressives closed down places where people could safely and cheaply get drunk and where, well, sometimes they decided to stop drinking and sometimes they kept going until death. It was arguably better to keep places like that around as not every drunk really wants to be straightened out.
Sometimes the left is correct and sometimes it isn’t. The point is that Dean is correct here. To judge whether an idea is correct by where it is on the political spectrum is utterly ridiculous. Paxton should know better than to use such a ludicrous measurement.
This, of course, is the bottom line – not just in this excellent post, but regarding the larger issue of what’s happened to journalism, and why.
Geneva Overholser, a former Post “ombuddy” and a national treasure when it comes to journalism itself – and, to critiquing how journalism is practiced (or not, these days) – is surely seething with rage.
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Centrist is just a big lie anyway. You can’t find a legitimate poll that says anything other than Americans don’t want cuts in Social Security or Medicare benefits. So the REAL centrist position is full support of both.
I don’t care what WAPO says. Only the pundit class reads it. What has me terrified are Senators like my own who play the centrist game when it suits them and play the progressive game when it suits them and who absolutely refuse to give me a straight answer on either Social Security or Medicare.
This is the reason I will not be voting for the Democratic Party in 2012. If you are going to screw me, you have to be willing to tell me and give me the chance to vote againt it and if you can’t tell me the truth and answer a simple question like: “will you oppose cutting Social Security or Medicare benefits” then I refuse to trust you on any issue of any kind.