Slips Of Paper

This column from The American Prospect was written by Rob Garver.
Republicans in the House and the Senate, led by President Bush, are making an all-out push to convince the American people that Social Security is in such a severe crisis that only drastic and immediate action can save it from financial oblivion. After the president finishes his State of the Union address on Wednesday, he's expected to go on the road, touting his Social Security reform agenda across the country.

He'll be doing this in part to drum up support among wavering Republican legislators, such as Oregon Senator Gordon Smith, who have been lukewarm in their public statements about the administration's plan to partially privatize Social Security. Hopefully when the president speaks to people across the country, he'll be a little more honest in his tactics than some of his fellow Republicans have been.

One of the loudest voices in support of the president has been Pennsylvania Senator Rick Santorum's. Santorum has been traveling around his home state with a PowerPoint-type slide show about the history and future of Social Security. The same presentation was, until recently, also available on Santorum's Senate Web site.

The slide show paints a grim picture of a system that is headed for collapse -- and is taking the U.S. economy with it. The Social Security Trust Fund, for instance, is not truly "solvent" because it is "filled with I.O.U.'s," the presentation warns. The fund "do(es) not hold resources to pay benefits," and faces a real problem in figuring out how to "translate I.O.U.'s into cash benefits."

Anyone watching Santorum present the slide show would likely think that he or she was seeing a product of the Social Security Administration (SSA). The SSA seal is prominently displayed above the image of a Social Security card, which also appears in several other places throughout the 46-page document.

Trouble is, the SSA had nothing to do with the presentation.

"This is not ours, and we did not provide it to them," said Social Security Administration spokesman Mark Hinkle, adding that he had not seen the presentation before it was forwarded to him by a reporter last week.
"Some of the facts are from the Social Security Administration's Web site, or the Social Security trustees' report," he said, but added that the document's heavy dose of spin "reflects the view of Senator Santorum."

"Obviously, we would rather not have our logo on it," said Hinkle. "I think it is understood that using the logo gives it a different connotation than we would like. We wouldn't want any outside group using our logo, whether it be a congressman, a think tank, or other group."

Asked if the SSA had asked Santorum's staff to stop using its logo in Social Security presentations, Hinkle said, "I think they understand that. Yeah."
"The slide show was compiled by Senator Santorum's staff, for the senator to utilize in educating Pennsylvanians on Social Security at town-hall meetings," said Santorum press secretary Christine Shott on January 28. "It was not a product of the Social Security Administration."

Regarding the appearance of the Social Security administration logo on the front page, Shott said, "When presenting it to individuals at town-hall meetings and for people to be viewing, it was used on the front of the slide show. It was not meant to say that this was a document of the Social Security Administration."

While the slide show may have confused some retirees in Altoona, it was immediately considered suspect by economists familiar with the facts of the Social Security debate.

"This is a political tract, and the Social Security Administration has a long tradition of some level of independence," said economist Len Burman, co-director of the joint Urban Institute/Brookings Institution Tax Policy Center. "Their analysis is considered to be very credible, and is based on staff analysis, not politics."

Others were more blunt.

"After a few slides I concluded very quickly that it was a crock," said Economic Policy Institute economist Max Sawicky, who first uncovered the Santorum presentation on his blog, MaxSpeak. "You wouldn't expect language that loose to come out of the Social Security system."

Both economists took particular exception to the characterization of the trust fund being "filled with I.O.U.'s."

Burman, a former Treasury Department official in the Clinton administration, said that characterizing the debt obligations of the federal government as "just an IOU" is misleading. "It is just wrong to say they are only slips of paper," Burman said, noting that the trust fund's holdings are U.S. Treasury bills -- the same sort of assets that provide a bedrock capital foundation for most U.S. banks and other financial institutions.

If Treasury bills are not actually worth the value the markets have placed on them, he said, we're all in big trouble. The attempt to use the "specter of political insolvency" to frighten people about the future of the system, Burman added. It's unlikely Congress will decide not to honor Treasury debt. In fact, as he said, it's "outside the realm of political reality."

After hearing from reporters last week, Santorum staffers shut down a link to the senator's presentation. But Sawicky has helpfully archived it here.

Rob Garver is a writer who lives in Springfield, Virginia. He is also studying at Georgetown Public Policy Institute.

By Rob Garver
Reprinted with permission from The American Prospect, 5 Broad Street, Boston, MA 02109. All rights reserved

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