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Budget Baloney


Mark Weisbrot

How

much falsehood and stupidity should the media allow to go unchallenged in public

debate? At what point do journalists and the press have an obligation to step in

and supply the necessary facts and explanations, so that the public can have a

chance to understand what is being misrepresented?

I

couldn’t help thinking about this after appearing on a TV talk show last week,

in which a representative of the Republican National Committee asserted that the

typical, middle-income family would receive about $7400 dollars over the next

ten years from the Republicans’ proposed tax cut. I pointed out that this was

false, that economists had estimated the number at about $160 a year, or $1600

for the 10-year period.

No,

she insisted, it was $7400, as if this were common knowledge. Curious to learn

where she got this number, I asked her after the show where I could find some

documentation of this claim. She handed me a print out from the web site of a

group called the Tax Foundation. They had divided the total tax cut over 10

years ($792 billion) by the number of households in the country, to get $7400.

I

tried to explain to her that this average did not represent what a typical or

middle income household would receive– because the richest 10 percent of

households will get sixty percent of the tax cut, with the average household in

the top 1 percent hauling down $460,000. Of course her average would still be

$7400 even if the whole $792 billion went to one person and everyone else got

nothing. But it was clear that this was entirely irrelevant to her– it reminded

me of Winston Churchill’s remark about people stumbling over the truth, only to

pick themselves up and hurry off as if nothing had happened.

Unfortunately

this is no isolated incident: it has become the norm in debates on budgetary and

economic issues. Politicians assume that the level of numerical literacy is so

low that they can get away with anything. Last week Congressional Republicans

gathered under a large banner that said, "Stop Robbing Social

Security." Now, where are the limits here? If they held up a banner that

said, "Stop the Invasion of Murderous Space Aliens," would this be

reported as though the invasion were actually taking place? Or as though it were

a matter of debate among scientists and law enforcement officials?

Nobody

is robbing Social Security of anything. Social Security is running a surplus,

projected at $150 billion over the next year. In other words, the Social

Security Trust Fund is taking in more money from payroll taxes than it is

obligated to pay out in benefits. By law, the Trustees are required to invest

this money in US Treasury obligations– which means they are loaning money to

the federal government.

The

same thing happens when anyone else buys a bond (or a note or bill) issued by

the US Treasury. The bondholder gets interest, and the principal when it is due.

If that is robbery, someone should immediately alert the millions of investors

holding US Treasury obligations, throughout America and the world, that they are

being robbed!

The

politicians insist that the Social Security surplus must be used only to pay

down the national debt– that is, pay off other bondholders. But this would

leave the Social Security Trust Fund in exactly the same position as if the

money were spent on anything from education to health care to tax cuts. The

Trust Fund would still be holding US Treasury obligations for the amount that it

lends to the Federal government.

Unfortunately

most Democrats have decided to play along with this game of liar’s poker, in

order to beat back the proposed Republican tax cut. This has led to a whole slew

of additional tricks and subterfuges– including programs labeled as

"emergency" spending, pushing expenditures into the next fiscal year,

etc.– all to avoid "dipping into the Social Security surplus." One of

the gimmicks proposed by House Republicans– postponing the earned income tax

credit for low-wage workers– blew up in their faces last week when George W.

Bush accused them of trying to "balance the budget on the backs of the

poor."

No

wonder so few people are paying attention to the debate over the budget. How

much would they learn about it if they did?

Mark

Weisbrot is research director at the Preamble Center in Washington, D.C.

Name:

Mark Weisbrot E-mail: <[email protected]>

Preamble Center

1737 21st Street NW

Washington DC 20009

www.preamble.org

 

 

 

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