woody_zimmerman_118_2007Republicans won resounding victories in November by running on a platform of fiscal responsibility. This was a distinct counterpoint to President Obama’s big spending first two years in office, aided and abetted by the Democrat-controlled 111th Congress. GOP senators and representatives came to Washington in January 2011 determined to rein in spending and put the country’s fiscal house in order.

Democrats tried to run on fiscal responsibility, too, but their claims and promises were not very convincing. After all, they had a record to run on. Many tried to run away from that record, knowing that many voters were in a mood to take the big spenders to the woodshed.

The GOP tide was not universal, of course, since a considerable segment of the electorate is sympathetic to the liberal/Democrat agenda. Many Democrats were re-elected to office. They retained narrow control of the Senate, although they could not hold the House. Dems took office with a more complex mission than Republicans – i.e., to protect Mr. Obama’s agenda and his budget, while appearing to advocate fiscal responsibility. These goals might seem mutually exclusive, but Democrats are making a game try at making them appear complementary.

Any strategy this complex naturally has to include a measure of misdirection and outright deception. That is manifestly so for Democrats in this case. One element of the misdirection tactic involves Social Security. Whenever Republicans start talking about serious budget cuts, Democrats always start talking about cutting “entitlements” – especially Social Security. (This is something like yelling “snake” at a Methodist ladies’ garden party.) It is designed to scare seniors into thinking Republicans want to take away their pension checks. And it raises a political uproar in the media and deflects attention from budgetary profligacy that should and could be addressed.

Certain Republicans can also depended on to join the Democrats’ call to “reform” Social Security – perhaps actually believing that Dems really mean it this time. This is a deception, however, as the only “reform” Democrats would ever contemplate would be higher taxes or reduced benefits for younger people. When George W. Bush proposed meaningful reforms that would have reduced claims on Social Security for the long term by allowing partial opt-outs, Democrats fought the idea to a complete standstill.

The difficulty here is not that Social Security is a false issue. It is a real issue that will have to be addressed in due time. But it has nothing to do with the current federal budget or deficit. Social Security’s bookkeeping is entirely separate from the federal budget. It does not affect the federal deficit.

Social Security is indeed on an unsustainable path, as numerous economists have been pointing out for some time. It has become the “elephant in the parlor no one wants to mention” – except when Democrats use it to deflect attention away from the other “elephant,” meaning the federal budget.

Social Security is heading for a crossover point around 2018, when current FICA tax receipts will no longer cover benefits being paid out. Over the decades when tax receipts have exceeded benefits paid, the US Treasury has left IOUs for $2.6 trillion it has borrowed from the Social Security Trust Fund. Only those promises to pay are left in that (virtual) Trust Fund. Starting in 2018 – or whenever Social Security goes into the red – those IOUs will have to be gradually repaid until the debt is settled.

Some politicians say this means that taxpayers will pay FICA taxes “twice.” Well, not quite. The Treasury has indeed been using the SS Trust Fund as an “easy-access lender” to fund the federal deficit, year by year. To repay the loans, Treasury will have to find new lenders. This will be particularly inconvenient if the federal government is running big deficits, since borrowing for the Social Security IOUs will be on top of the new lending Treasury must find to fund the federal deficit racked up each year. Paying back the Trust Fund ups the borrowing “ante.”

Thus, while the Social Security crossover will eventually affect the federal budget, at present it does not. Social Security accounting is entirely separate from the federal budget. If present benefits were actually cut, the “crossover” point might be delayed, but there would be no effect on the deficit. This is why I call Social Security a “budgetary misdirection.” It diverts public attention away from the immediate issues and allows media to obsess on controversial stuff that has nothing to do with the annual budget-deficit. This is political legerdemain. Republicans should be hammering this point relentlessly, but they are not.

Democrats and the media have also managed to convert the budget-cutting issue into a tug-of-war or horse-race between the parties. Who’s winning? Who’s losing? Will an impasse be reached, leading to a federal government “shutdown”? If so, who will be blamed, and what will the political fallout be?

This is fun for the perfectly coiffed male and female info-babes on cable 24/7 news channels. It supplies grist for their daily talk-athons. It also serves a useful purpose for Democrats who want to keep the focus off the obscene levels of nonsense and redundant expenditures found in the federal budget. You can look hard in the print- and broadcast-media, but you won’t see much budget-detail except a few puff-pieces on how the GOP wants to take children out of schools and/or eliminate their school lunches.

Despite these heroic efforts to obscure the messy details, a GAO report did surface during the past week, detailing massive redundancy in federal programs. Even yours truly was shocked by the scope of the compilation, which I furnish for my readers’ edification (or not), as follows:

  1. Food safety: 15 agencies are involved in implementing numerous federal laws.
  2. Defense: Numerous redundancies in the purchasing of tactical wheeled vehicles, procurement, and medical costs.
  3. Economic development: 80 different programs spread across numerous agencies, often with similar goals.
  4. Surface transportation: More than 100 programs run by five divisions within the Department of Transportation deal with surface transportation.
  5. Energy: Eliminating duplicative federal efforts to increase ethanol production could save $5.7 billion each year.
  6. Government information technology: 24 federal agencies deal with information technology.
  7. Health: The Defense Department and the Department of Veterans Affairs could work together  - instead of separately - to modernize their electronic health records systems.
  8. Homelessness: More than 20 federal programs deal with homelessness.
  9. Transportation Security Administration: Assessments of commercial trucking overlap with another federal agency.
  10. Teachers: 82 programs that deal with teacher-quality, spread across multiple agencies.
  11. Financial literacy: 56 programs dealing with financial literacy.
  12. Job training: 44 employment and training programs.

(Please refer to the Post Scripts report of March 4, 2011 for the full report - http://www.norcalblogs.com/post_scripts/2011/03/breaking-news---gao-expos.html )

You don’t need a degree in economics to understand that hundreds of billions of dollars in annual federal expenditures could be saved by folding up even a portion of this scandalous redundancy. We also don’t need Nobel-laureates to tell us that a $3.7 trillion federal budget that runs a deficit of $1.5 trillion cannot all be “critical spending.”

The beast has to be attacked head-on, but we have to know what we are dealing with. Please, no more dumb stuff about seniors losing their Social Security, kids going without textbooks, or government-shutdown games. As Joe Friday famously said: “Just the facts, ma’am.”