Geithner and Carney drawing a fiscal cliff line in the sand?
posted at 5:11 pm on December 3, 2012 by Dustin Siggins
Yesterday, Treasury Secretary Timothy Geithner laid down one of the few definitive lines in the fiscal cliff discussions: Social Security reform is off the table for reform. In addition to taking more money from taxpayers, this appears to be the other line in the sand for the Obama Administration.
Unfortunately, Geithner, President Obama, and the rest of the crew at the White House are ignoring the fiscal realities facing Social Security – problems that include, but are not limited to, how the program is all but broken, the trust fund will start emptying in 2013, and the program will maybe last another 20 years as it is currently designed. Which means today’s seniors may see some harm, middle-aged Americans will see a lot of harm, and younger Americans will likely face devastatingly higher taxes or benefit cuts.
They’re not just doing it on fiscal policy, either – they’re pulling out all the stops for this deceit. Last week, for example, White House Press Secretary Jay Carney said Social Security is off the table:
While a potential change in calculating Social Security increases was part of the talks with Speaker John A. Boehner last year, the White House press secretary, Jay Carney, made clear on Monday that the administration was not considering changes to the retirement program as part of the deficit talks.
“We should address the drivers of the deficit, and Social Security is not currently a driver of the deficit,” Mr. Carney said.
Carney’s comments are very intellectually dishonest, and he knows it. Just a couple of years ago, after all, the Administration was happy to include Social Security in the federal budget when the program ran a surplus. As explained by the think tank Just Facts (emphasis added):
During the federal government’s 2010 fiscal year…the national debt rose from $12.0 trillion to $13.6 trillion…
The White House…reported that the 2010 federal “deficit” was $1.3 trillion.
The difference between the national debt increase of $1.6 trillion and the reported deficit of $1.3 trillion is attributable to the following accounting practices:
When calculating the reported deficit, the federal government merges the finances of all federal programs into what is called the “unified budget.” Hence, the deficit does not account for the intergovernmental debt that arises when programs such as Social Security loan their surpluses to the federal government.
When the federal government lays out money for programs such as TARP and student loans, the outgo is not fully counted in the deficit. The deficit reflects only what the government expects to lose or gain on these loans.
In short, Jay Carney’s boss was happy to use Social Security to make things look better, but is unwilling to use the same accounting standards when they don’t benefit him. Didn’t someone run against those kinds of budget gimmicks in 2008?
Between Obama’s fiscal cliff proposal and subsequent vacation, and Carney’s and Geithner’s comments, the Administration is finally making its intentions clear: tax the so-called “rich,” cut next-to-nothing from the budget, and claim that this will bring back the glory days of the Clinton era. Never mind that the entire argument ignores at least seven major Clinton-era fallacies, and that a return to the Clinton-era tax rates on the “wealthy” only raises 1.88% of the next decade’s expected spending.
Spending cuts, entitlement reform, and tax reform are the three major keys to economic recovery and preventing the transformation of America into today’s Greece. Unfortunately, Obama’s opening negotiations on the fiscal cliff are not hopeful signs that he takes any of them seriously.
Dustin Siggins is the principal blogger for the Tea Party Patriots, a national grassroots coalition with more than 3,500 local chapters. He is also a co-founder of LibertyUnyielding.com, and the author of a forthcoming book on the national debt. The opinions expressed are his own.