Media Matters catches Fred Barnes in a profound display of ignorance about Social Security. During a discussion with Brit Hume on the March 9 edition of Fox News' "Special Report," Barnes didn't appear to understand that private accounts do not improve the solvency of Social Security. The reason is obvious: every dollar diverted into private accounts is one less dollar that can be used to pay current benefits. This is an elementary point for anyone following the debate, but not Barnes:
BARNES: In truth, they [private accounts] are part, not the whole, but they are a part of the solvency issue. And they do --
BRIT HUME (anchor): In what sense?
BARNES: Well, in the sense that eventually people getting -- rather than money from the Social Security system and from taxes, their retirement will be funded in part by their earnings from where they've invested their money.
HUME: In private accounts.
BARNES: BARNES: Yes. Their payroll tax money in private accounts.
HUME: So a different part of Social Security --
BARNES: So it means that the unfunded liability of Social Security shrinks, and less money has to come out of the system, which is financed by taxes. And more money will come out of being earned in the regular economy in America.
MORT KONDRACKE: But there's a --
BARNES: So they are a part of it. They're just not the whole part.
Meanwhile, liberals have their own tricks. One is to pretend that nothing bad happens fiscally until the Social Security trust fund is exhausted, which Media Matters used to criticize former RNC chairman Ed Gillespie:
On MSNBC's Hardball with Chris Matthews, former Republican National Committee chairman Ed Gillespie claimed that Social Security faces a "financial calamity" in 2018, when the trust fund "begins paying out more than it takes in," and asserted that "[w]e better be prepared as a country to deal with it." But government studies show that Social Security will be able to pay out full promised benefits for several decades. The program will have sufficient funds to pay full benefits until 2042, according to a report by the Social Security trustees, or until 2052, according to a study by the nonpartisan Congressional Budget Office.
But of course, the funds used to pay benefits between 2018 and the date of trust fund exhaustion will come from the general federal budget as Social Security redeems the bonds it has accumulated. Those bonds may represent real financial commitments, but they will pressure the federal budget nonetheless.
And Fairness and Accuracy in Reporting, in an exchange with New York Times ombudsman Daniel Okrent, wrote this misleading sentence:
"Private accounts" was the accurate term used by both sides of the debate until Republicans realized it wasn't polling well; they then started calling them "personal accounts," a deceptive term because citizens already have personal Social Security accounts that keep track of their individual contributions.
Individuals do have Social Security records tracking their contributions, but they do not have "accounts" in the financial sense of separate, interest-bearing accounts that contains each person's contributions. FAIR is obviously exploiting this common misconception.
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