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02/21/2005: "IF I HEAR THIS PHRASE AGAIN I’M GOING TO SCREAM!!!"

I hear that the guys behind the Swift Boat Veterans for Truth are being enlisted to push Bush’s Social Security plan. Can’t you just picture the ads we’ll doubtless shortly be seeing? How about something like this: “Edward Kennedy called the President’s budget reckless and irresponsible. He’s lying. White House budget director: ‘I was there. It’s not true. The accusations that Edward Kennedy has made against the White House financial staff have been just devastating. He’s sullied the reputation of every government accountant.’ Secretary: ‘He said the budget numbers were physically abused. He’s lying. I know. I was here during the Reagan years and deficits as a percentage of GDP were worse.’ Tom DeLay: ‘By saying that George Bush’s budget is irresponsible Edward Kennedy is sullying the memory of a great American President scant months after his passing. It’s disgusting.’ A Senior: ‘He is dishonoring his country and politicians he served with. He’s selling us all out. He’s giving the enemies of Social Security all of the propaganda they want. It’s demoralizing us, and hurting the President’s brave effort to save this benefit for future generations.’ Voiceover: ‘Swift Boat Social Security Recipients for Truth is responsible for the content of this ad.’” These ads will doubtless contain the phrase that makes me want to scream whenever I hear it: “deficits as a percentage of gross domestic product have been higher in the past.” This phrase is grossly misleading for three reasons. First, it implies that these percentages ran “hot” year on year. The truth, readily apparent to anyone who has seen a graphic presentation of historical deficits as a percent of GDP, is that they took a huge spike in 1985 as Reagonomic supply side fantasies was revealed as bogus. Even Reagan realized this and raised taxes in a panic. The 1985 experiment thus looks like a graphic Matterhorn rather than routine practice. More importantly, there was no Social Security Trust Fund surplus in 1985. This is extremely important in deficit determinations (but conveniently overlooked) because surpluses to the Trust Fund subtract from the deficit. For example, the deficit for 2004 at just over $400 billion was just over 3.5 percent of GDP. At the same time, the Social Security Trust Fund subtraction from the deficit was $146 billion in 2002. That same year, interest on the national debt was $333 billion. Both numbers, added to current deficits, reveal the financial situation of the US much worse than that faced in 1985 before the GOP multi-trillion runup of the debt, a runup that will have to be paid back at some point. The sorrow of the current situation is that it’s not a blip like Reagan’s one year peak in deficit as a percentage of GDP, but a decades-long term trend heading in the wrong direction, a hole that we’re still digging and that could well cave in unexpectedly should our foreign lenders start asking for interest rates just a few points higher.