In an effort to contradict Senate Minority Leader Harry Reid's (D-NV) claim that “Social Security is not in crisis” and bolster President Bush's claim that "the crisis is now," FOX News chief White House correspondent Carl Cameron falsely claimed that Social Security “becomes insolvent” in 2018. The truth is that according to the Social Security trustees' report, prepared by Bush administration political appointees, the system will have enough money to pay all scheduled benefits with no changes until 2042; the nonpartisan Congressional Budget Office estimates that the system can pay promised benefits until 2052.
On the February 2 edition of FOX News' FOX Report, Cameron previewed a portion of Bush's upcoming State of the Union address related to Social Security and reported that Democrats planned to oppose Bush's Social Security plan “sight unseen”:
CAMERON: Now, the big issue tonight is Social Security reform and the president's plan for personal accounts. GOP sources say no workers 55 years or older will see any benefit reductions. Younger workers would have the option of steering a third of their Social Security payroll taxes into personal retirement accounts. ...Sight unseen, the leader of the Democrats in the U.S. Senate has said his party is already prepared to block it outright.
REID [clip]: Social Security is not in crisis -- underscore, underline, parentheses, big bold letters. Social Security is okay for the next 50 years.
CAMERON: But in 2018, Social Security becomes insolvent, paying more in taxes than incoming payroll taxes. Without reform, the problem hits in 13 years, not 50.
In fact, 2018 is simply the year when Social Security will begin to pay out more in benefits than it collects in revenue through payroll taxes. But the system has collected more in payroll taxes than it pays out in benefits for decades, using these surpluses to build up a trust fund, precisely so that in 2018 it can begin using these assets -- along with new payroll taxes -- to pay beneficiaries. What Cameron labeled a “problem” is actually part of the system's design.
A January 10 New York Times editorial explained:
In suggesting that 2018 is doomsyear, the president is reinforcing a false impression that the trust fund is a worthless pile of I.O.U.'s -- as detractors of Social Security so often claim. The facts are different: since 1983, payroll taxes have exceeded benefits, with the excess tax revenue invested in interest-bearing Treasury securities. (An alternative would be to, say, put the money in a mattress.) That accumulating interest and the securities themselves make up the Social Security trust fund. If the trust fund's Treasury securities are worthless, someone better tell investors throughout the world, who currently hold $4.3 trillion in Treasury debt that carries the exact same government obligation to pay as the trust fund securities. The president is irresponsible to even imply that the United States might not honor its debt obligations.
Cameron's claim that Democrats have decided to oppose Bush's plan “sight unseen” is also misleading. Though Bush has not formally endorsed a detailed plan, there is ample evidence to indicate the outline of what he favors. First, Bush formed the Commission to Strengthen Social Security in 2001, and “Model 2” from that commission's report (PDF) is widely expected (see, for example, U.S. News & World Report, USA Today, The Washington Post, and The Boston Globe) to form the basis of the reform plan Bush will propose. Second, Bush administration officials have made numerous statements indicating what the central elements of what Bush's plan will be (see, for example, here and here). Finally, the media widely reported (see, for example, the Associated Press, The Washington Post, and USA Today) on a memo about Bush's plans for Social Security from Peter H. Wehner, head of the White House Office of Strategic Initiatives (full text here).
Cameron's implicit criticism of Democrats who oppose Bush's plan “sight unseen” echoed FOX News chief Washington correspondent Jim Angle, who showed a clip of an ad opposing Bush's plan by the liberal advocacy group MoveOn.org on the February 1 edition of Special Report with Brit Hume, then declared: “Of course, the president hasn't even selected a plan, and isn't expected to lay one out in the State of the Union. But critics are already assuming what he's going to propose and arguing how horrible it would be.”