Two Lies for the Price of One

Recently, President Obama responded to the question of a reporter about whether Social Security checks would go out on August 3 if the debt ceiling was not raise by August 2 by saying, “I cannot guarantee that those checks go out on August 3 if we haven't resolved this issue because there simply may not be the money in the coffers to do it.”

I have seen a few comments that this points out the lie that politicians have told for years that there is a Social Security trust fund that guarantees that Social Security benefits will be paid. In truth, the so-called trust fund is a promise by the rest of the government that when payroll taxes become inadequate to pay the Social Security benefits that they are intended to finance, the government will raise the money to pay the short fall – by either taxes or borrowing. In other words, the trust fund is not really backed by anything other than a bookkeeping entry and a promise by the government to pay – provided of course that it is able to.

What everyone seems to be overlooking, however, is that even in the absence of a trust fund and even in the middle of a weak economy, there are enough payroll taxes being collected to pay for nearly all of the Social Security benefits that need to be paid. More importantly, as long as they are needed to pay Social Security benefits, those taxes cannot legally be used for any other purpose; they are dedicated specifically for the purpose of paying Social Security benefits. In other words, there will be plenty of money in the coffers that can be used to pay for Social Security benefits and for no other purpose. There may be some shortfall, but I am so confident that the government can and will make up whatever shortfall there may be with the other tax revenue that comes in, that I will do what the President is unwilling to do and guarantee that Social Security benefits will be paid in full. Well, OK, I am not really guaranteeing that because I don't actually have the billions of dollars it would take to make good on such a guarantee, but the point is I think the President has made so many promises that he has no ability, and perhaps no intention, to keep that he overlooked that a promise to pay Social Security benefits on August 3 is one of the easiest promises off all to keep – no matter what happens with the debt ceiling by August 2.