Truth-Lie: Social Security as Cause of the Deficit

Let’s consider a front-page problem today — Social Security as part of the Federal government deficit. The discussion illustrates something vital in your spiritual life — understanding truth-lies and the methods people use to deceive you (even in the so-called Christian church).

Deception infects much more than politics as the church falls for the poison of liberal theology; understanding truth-lies and logic will become essential to your well-being. It’s not only a political issue, but spiritual as well as the current discussion over Social Security provides another example of the importance of logic and critical thinking.

Don’t fall for tricks John Loeffler calls “truth-lies” — something which might be technically true, but used to deceive or give a false impression.

You’ve heard politicians boldly proclaim Social Security isn’t part of the deficit, and shouldn’t be involved in deficit reduction discussions. Is this true? The CBO says about the Social Security “trust funds”:

… certain taxes—especially payroll taxes for Social Security and Medicare, which are credited to those trust funds—may lead taxpayers to believe that they have paid for future benefits. Trust funds can be useful mechanisms for monitoring the balance between earmarked receipts and a program’s spending, but they are basically an accounting device, and their balances, even if “invested” in Treasury securities, provide no resources to the government for meeting future funding commitments. When those payments come due, the government must finance them in the same way that it finances other commitments—through taxes or borrowing from the public. (CBO paper “Measures of the US Government’s Fiscal Position Under Current Law”, September 2004, page xi)

It’s like you wrote yourself a check for $1,000,000 and said “look how rich I am!” Of course, actually cashing that check means you have to get the money from somewhere — borrow it or earn it.

The same with Social Security. The so-called trust fund contains nothing but IOUs (Treasury Bonds). When Social Security cashes the bonds the Federal government must borrow or raise taxes to pay for it — exactly as the government’s own CBO states.

The “surplus” of Social Security has been taken by the government and spent. There is no surplus, trust fund, or savings of any kind, and when the bill comes due, one or more things will happen:

  1. Borrowing to continue massive Federal deficits.
  2. Massive tax increases to pay entitlement benefits.
  3. Huge inflation of the currency (aka Quantitative Easing).
  4. Failure to pay Social Security promises.

That day comes very soon — as soon as Social Security taxes fail to pay for current benefits (negative cash flow, or paying more in benefits than taken in in taxes). As it descends deeper and deeper into red ink, those tax increases/benefit cuts/deficits/inflation will become stunningly large.

There is no free lunch, contrary to how you’ve been lied to by the Administration and Congress who believe they can continue to spend your money without limit, and the bill won’t come due.

“My dear guests, I am Mr. Roarke, your host. Welcome to Fantasy Island!”

Similar to the myth of the Clinton budget surplus (which surplus never existed), or the myth stimulus creates jobs this myth has a small element of truth to it (a trust fund exists), but it’s only used to deceive people into believing something which isn’t true (Social Security can use that fund to pay benefits without increasing taxes or borrowing).

It’s a “truth-lie.” Yes, technically it’s true Social Security has a fund, but it holds government IOUs (Treasury Bonds), which means when Social Security needs those funds to pay benefits — surprise! — those funds will come from borrowing, raising taxes, or inflation.

Anyone believing otherwise hasn’t done their homework.

Deception infects the church as well, as some claim the gospel of social justice, ignore what sin is, believe the church exists for the common good, or spread heresy like replacement theology.

All wrong. All deception. All easily cast off by those who study their Bible seriously.

Beware the truth-lie. Do your homework. Don’t be deceived.

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