In this continuing series, “Questions for Martha McSally,” we pose questions to
the McSally campaign about her positions on current hot topics — I am
not going to give her a free pass until after the GOP primary like our local media did in 2012 — and neither should you.
In February 2012, McSally said that she supported “many elements” of Rep. Paul Ryan’s FY 2012 budget.
In April 2012, McSally said that she would have voted for Rep. Paul Ryan’s budget for FY 2013.
Now that the GOP’s alleged boy genius, Ayn Rand fanboy and “zombie-eyed granny starver from Wisconsin” Rep. Paul Ryan, has released the latest version of his “Path to Prosperity” aka the “Road to Perdition” budget on Tuesday, the question to the McSally campaign is, “Would Martha McSally vote for Rep. Paul Ryan’s FY 2015 budget?” Please respond in the comments below.
Here is what LA Times business columnist Michael Hiltzik has to say about the latest iteration of the Paul Ryan budget. Paul Ryan rehashes an old Social Security lie–at your expense:
There should be a rule–or even a law–that politicians who propose “fixes” to Social Security should at least show they know something about the program. By that standard, House Budget Committee Chairman Paul Ryan, R-Wisc., would flunk.
What’s worse, his misunderstandings–heck, let’s go ahead and call them misrepresentations–are aimed at taking your money.
What’s at issue is a passage in the budget resolution Ryan released today, the fourth annual version of his “Path to Prosperity” budget. Like the others, this budget calls for large cuts in government programs for the poor, in order to preserve tax breaks for the rich and finance lavish defense spending.
But what concerns us here is his description of the Social Security trust fund, which currently holds close to $3 trillion in U.S. Treasury bonds, all purchased with payroll tax income paid by working men and women since 1983.
The idea of building up this trust fund was to bank excess tax revenues against the looming wave of baby boomer retirements, which has now begun. But the trust fund is still growing, because Social Security’s income streams–the payroll tax, interest on its bonds, and revenues from income taxation of benefits–still are sufficient to cover current benefits, and then some.
Ryan wants you to think different. Here’s the passage in question, from page 66 of his plan.
“Any value in the balances in the Social Security Trust Fund is derived from dubious government accounting. The trust fund is not a real savings account. From 1983 to 2010, it collected more Social Security taxes than it paid out in Social Security benefits. But the government borrowed all of these surpluses and spent them on other government programs unrelated to Social Security. The Trust Fund holds Treasury securities, but the ability to redeem these securities is completely dependent on the Treasury’s ability to raise money through taxes or borrowing.”
The same language appeared in Ryan’s 2012 budget resolution, but not in his 2013 and 2014 versions (as far as we could tell). It’s back now, and no more accurate or honest than it was three years ago.
Let’s examine the misrepresentations embedded in these 90 words by explaining exactly how the trust fund works.
From 1983 on, the payroll tax was increased to produce more revenue than was needed to pay benefits each year. The idea was to build up a reserve to cover the coming wave of baby boomer retirements; in effect, the baby boomers have been pre-funding their own old-age benefits.
The natural question was: what should be done with the money in the meantime? It wouldn’t make sense to just place it under a national mattress, for inflation would have reduced the value of the holdings by as much as half over the last three decades.
The answer was to place the money in an interest-bearing account–that is, invest it for a yield above inflation.
That’s what’s been done. The money has been invested in U.S. Treasury securities, just as you might do by purchasing Series EE savings bonds, or TIPS. Why do people invest in T-bonds? Because they’re the safest securities in the world. The U.S. has never, ever defaulted on them (although the Tea Party wing of the GOP seems to think that would be a good idea). The money isn’t invested in corporate securities or anything else, because Congress hasn’t allowed that.
The Social Security trust fund’s bonds are backed by exactly the same commitment of the U.S.’ “full faith and credit” as any other Treasury security. Keep your eye on that ball, because Ryan is going to try to palm it.
When one buys a T-bond, one is effectively lending the money to the government, which then uses it to do things. So, yes, Ryan is correct in stating that “the government borrowed all of these surpluses and spent them on other government programs unrelated to Social Security.”
Right. On national defense. Two wars. Construction of roads, school buildings, courthouses. On the salaries of congressmen like Rep. Ryan. What of it?
Was this money wasted? Hardly. The U.S. economy has more than doubled in size (adjusted for inflation) over that time, in significant part because of the infrastructure and services provided by government–including with that borrowed money.
It’s worth noting, however, that under George W. Bush, the government also used those surpluses to preserve tax breaks for the wealthy, by spending the borrowed funds on those wars without having to raise the income tax, which is predominantly paid by the wealthy. The payroll tax is predominantly paid by the middle class and the working class, so in effect the latter has made an interest bearing loan to the former.
As I’ve written before, when you hear people like Paul Ryan talk as though the country can’t afford to pay back the money by redeeming the bonds in the trust fund, what you’re hearing is the sound of the wealthy preparing to stiff the working class. If the income tax has to be raised to turn those T-bonds into cash for payment of benefits over the next couple of decades, that’s how the rich will be made to repay the people who lent them the money. Some people love to claim that the government has “stolen” the trust fund. The correct reply to that is: “Not yet.”
But if Ryan has his way, yes, the money will be stolen. It’s up to you and me to make sure that doesn’t happen.
In case you have forgotten, McSally is on record supporting privatization of social security in the past.
In 2012, McSally argued for allowing people to invest their Social Security payments in private accounts. McSally wrote:
“For younger workers, we need to consider approaches such as gradually increasing the retirement age and allowing them to invest a portion of their Social Security payments in ways that will allow them to maximize their returns.”
(Green Valley News 4/4/12; Arizona Daily Star 3/25/12)
In 2012, McSally praised the proposal to privatize Social Security
“Some innovation and ideas are on the table which are worth looking at for people to keep some money in their pockets when it comes to Social Security,” she said. (Green Valley Republican Club debate 4/12/12).
In a 2012 survey, McSally suggested allowing individuals to personally invest their Social Security benefits:
3) On Social Security: What do you suggest we do to ensure future generations get their Social Security benefits?
3) We must keep the promises we’ve made to seniors and veterans. But a decade of irresponsible spending has left us some tough choices. We need to look at gradually increasing the retirement age for younger workers and giving individuals more options to invest part of their benefits for higher returns.
(Arizona Daily Star 3/25/12)
As Michael Hiltzik writes, “if Ryan has his way . . . the money will be stolen. It’s up to you and me to make sure that doesn’t happen” by not voting for his willing accomplices, like Martha McSally.