It’s a funny thing, but politicians more than any other group seem to have an incredibly hard time admitting failure when it comes to programs and policies they support. Take congressional housing kingpin Representative Barney Frank for example. A devout proponent of Fannie Mae and Freddie Mac, Frank never saw the collapse of the two Government Sponsored Entities coming. In fact, he made proclamations on at least one occasion before Congress that, “Fannie and Freddie are not in crisis”. Of course, both were in a crisis ultimately requiring a huge taxpayer bailout.
Then there were Fed Chief Ben Bernanke’s constant denials that a housing bubble wasn’t forming and the economic joyride produced by his and his predecessor’s easy money policies was going to last forever. The housing bubble was so bad that almost 3 years after it popped home values are still falling.
Now, add Nevada Senator Harry Reid to the list of failure denying politicians. His cause – the third rail, the fourth estate, the system bearing the name that makes all statists smile. Of course, I speak of Social Security. Last Sunday on Meet the Press, the following exchange took place between host David Gregory and Reid:
SEN. REID: One of the things that always troubles me is, when we start talking about the debt, the first thing people do is run to Social Security. Social Security is a program that works, and it’s going to be–it’s fully funded for the next 40 years. Stop picking on Social Security. There are a lot places we can go to…
MR. GREGORY: Senator, you’re really saying the arithmetic on Social Security works?
SEN. REID: I’m saying the arithmetic on Social Security works. I have no doubt it does.
MR. GREGORY: It’s not in crisis?
SEN. REID: No, it’s not in crisis. This is, this is, this is something that’s perpetuated by people who don’t like government. Social Security is fine. Are there things we can do to improve Social Security? Of course.
Even the lover of state power host David Gregory couldn’t believe the temerity of Reid’s comments about Social Security.
So, why was Reid’s description of Social Security so inaccurate? Well, according to the Congressional Budget Office (CBO), benefit outlays under current law will begin to exceed tax revenues on a regular basis starting in 2016. Additionally, the CBO projects that the disability benefits portion of the “trust fund” will run out of funds in fiscal year 2018 and the old age retirement “trust fund” will be exhausted in 2042. The CBO’s projections take into account baby boomer mass retirement and dispute Reid’s claim that Social Security is “fully funded for the next 40 years”. And this doesn’t even take into account the fact that the Social Security “Trust Fund” currently has IOUs totally about $2.5 trillion because spendthrift politicians have raided it over the years to fund the rest of the warfare/welfare state.
The truth is Social Security faces insolvency because it is a Ponzi Scheme. In fact, it’s a larger Ponzi Scheme than Bernie Madoff’s. His was estimated to be in the hundreds of billions, Social Security’s is in the trillions. You see Social Security is unlike other have paid retirement programs in that you don’t technically own your contributions to the fund and the fund is not invested in anything tangible. As a matter of fact, the Supreme Court ruled in Flemming v. Nestor 1960 that the federal government is not even contractually obligated to pay you benefits even though you may paid into the program all your life. Some deal, uh? Yet Harry Reid maintains that it is I am sure because he doesn’t pay into it.
We are all aware of the devastation caused by the policies and programs supported by the likes of Barney Frank and Ben Bernanke. Fannie and Freddie collapsed and the housing market popped in spite of the positive sentiments expressed by the dynamic duo. Certainly, other examples can be found where politicians refused to admit failure and danger could have been avoided. Hopefully, some other leader in Washington will have more sense than Harry Reid and work to do something to prevent the coming Social Security crisis.