President Bush yesterday paid a visit to the file cabinet in West Virginia that holds the Social Security trust fund.
The goal was clear: To increase the public's doubt about the program's future.
"There is no 'trust fund,' just IOUs," Bush said in making his case that Social Security is headed for some serious financial problems.
And indeed, the trust fund is a pile of paper, not a pile of gold. But those papers -- just like other government securities -- represent promises backed by the "full faith and credit" of the United States.
So was Bush really suggesting that those promises might not be kept? That American workers have somehow been defrauded?
American workers have contributed excess Social Security payroll taxes for years, amassing a $1.7 trillion surplus that, yes, the government has spent on other programs. But the government promised to pay it back. It's not unlike when someone buys a Treasury bill, for instance; the money is not hoarded away, it is spent by the government. But the government promises to pay it back.
Some of us had hoped that Bush, having gotten up close to the file cabinet, would clarify his ambiguous position on the trust fund and whether he is actually suggesting that the government would renege on its promise. (See, for instance, my Feb. 11 column.) But he didn't.
He instead, once again, said the trust fund didn't exist but didn't go into any detail -- and he called attention to the fact that Social Security is a "pay as you go" system.
Bush is probably right that many people don't grasp that, thinking instead that their money is sitting in government coffers or in some sort of massive, poorly performing 401(k) account.
But calling attention to the trust fund -- and the true nature of Social Security -- could be something of a double-edged sword for the president.
The fact that the Social Security trust fund is composed of promises rather than bullion illustrates how Social Security's surplus has, for years, been masking some of the effect of massive government spending combined with massive tax cuts.
The pay-as-you-go nature of Social Security also accentuates how Bush's personal accounts idea would represent a massive overhaul of the system, rather than just a tune-up. If in fact Social Security had been socking away all that money, then private accounts would be much less controversial. After all, why not get a higher return by investing in stocks and bonds?
But Social Security isn't a 401(k) -- it's a social insurance program in which one generation pays taxes so that members of the previous generation won't live their old age in destitution.
Front-loading what has been a pay-as-you-go program, when you come to think about it, is no small thing.
Calling attention to the file cabinet also highlights the massive overpayment people are currently making into the system. If those IOUs don't mean anything, then why are today's workers paying some $70 billion a year more in payroll taxes than the system technically needs to pay as it goes?
They're doing it, of course, because of a promise.
What Bush Said
Here's the text of Bush's comments during his visit to the Bureau of the Public Debt.
"See, what's interesting is a lot of people believe that the Social Security trust is -- the government takes a person's money, invests it, and then pays it back to them upon retirement. It doesn't work that way," he said.
Here's the text of his speech at West Virginia University at Parkersburg, just after his visit.
"I went there because I'm trying to make a point about the Social Security trust. You see, a lot of people in America think there's a trust, in this sense -- that we take your money through payroll taxes and then we hold it for you, and then when you retire, we give it back to you. But that's not the way it works.
"There is no 'trust fund,' just IOUs that I saw firsthand, that future generations will pay -- will pay for either in higher taxes, or reduced benefits, or cuts to other critical government programs.
"The office here in Parkersburg stores those IOUs. They're stacked in a filing cabinet. Imagine -- the retirement security for future generations is sitting in a filing cabinet. It's time to strengthen and modernize Social Security for future generations with growing assets that you can control, that you call your own -- assets that the government cannot take away."
Dennis Cauchon writes in USA Today: "President Bush's visit Tuesday to a federal agency in West Virginia that holds the Social Security trust fund put the spotlight on a $1.7 trillion promise to the nation's retirees.
"But it didn't settle the debate about the financial value of the trust fund.
"Physically, the trust fund consists of 8-by-11-inch sheets of paper, fastened inside two notebooks and tucked in a drawer of a four-drawer filing cabinet at the U.S. Bureau of the Public Debt in Parkersburg, W.Va. The drawer is secured by a combination lock. . . .
"Bush offered the filing cabinet as proof that 'there is no trust fund -- just IOUs.' . . .
" 'What did (Bush) expect to see there? Gold?' asked Dean Baker, a liberal economist who says Social Security does not face a financial crisis. 'The trust fund contains government bonds that are just like any other government bonds.' "
Ron Hutcheson writes for Knight Ridder Newspapers that, "if the IOUs are worthless, so is the 'full faith and credit' of the federal government, independent financial analysts said. The reality is a little more complicated than Bush acknowledged, and it goes to the heart of the debate over Social Security's future."
Caren Bohan writes in Reuters: "President Bush said on Tuesday that younger workers were counting on a fictional trust fund for their future retirement benefits, as he pressed his case for changes to Social Security in the face of continuing doubts among fellow Republicans."
Anne E. Kornblut writes in the New York Times: "President Bush tried on Tuesday to refocus attention on what he called the 'accelerating problem' of Social Security, despite a surge of outside forces that have intruded on his 60-day publicity blitz for his plans to overhaul the program."
I'm Live Online today at 1 p.m. ET, responding to your questions and comments. And yes, before you ask, there is some news in the Valerie Plame case. Scroll down.
About the Event
Bush's Social Security events, often billed as "conversations," typically feature carefully screened and prepped speakers who join him on stage. Bush then uses leading questions to guide them through their rehearsed talking points. They always agree with him.
Yesterday, the White House prototyped an even more controlled and compact approach. Bush just met with two screened and prepped locals backstage -- briefly -- to confirm a few lines for his presentation.
I spoke with one of the locals, Betty Earl, yesterday, and asked her how she came to be there.
"I really don't know," she said, while allowing that it might have something to do with the fact that "I volunteered working for his campaign."
The White House called several times to chat about her feelings regarding Social Security. There was no arm-twisting required.
"My view was in concrete before they called me," Earl said. "I am a firm supporter of his Social Security reform, and it definitely needs to be done. I can't understand why AARP is fighting it so."
Earl said she got several calls from a man named Tim Reynolds, who the White House tells me is the new deputy associate director of the National Economic Council. At least once, he put her on a conference call with a couple of speechwriters, she said.
"Apparently they liked a quote that I made, about how it doesn't take an Einstein, which I don't think it does. Apparently they sort of liked that, and it pretty much summed up how I felt."
Backstage yesterday, Bush approached her. "He comes around and shakes my hand and greets me and talks to me, and asks me about my quote, and he says, 'I like that quote,' and he says, 'Do you mind if I use it?' and I said 'No.' . . .
"It was so exciting," Earl said. "I was honored."
And here's how it came out of Bush's mouth: "I met with Betty Earl coming in. She's lived in Parkersburg for about 40 years -- or the area for 40 years. She has two daughters in their 30s. She doesn't think the Social Security system will be there when they retire. She represents the attitude of a lot of folks, now that this issue is becoming clarified. She said, 'It doesn't take an Einstein to see where Social Security is headed.' And she doesn't want Congress to wait until Social Security goes bust before starting to fix it."
The Democrats Fire Back
The House and Senate Democratic leaders sent a letter to Bush yesterday, urging him to publicly express his commitment to paying back the Social Security trust fund and renounce his suggestion that it doesn't exist.
"This type of statement is highly misleading and dangerous. . . . For a President to even suggest that the federal government might, for the first time, default on a security backed by the full faith and credit of the United States unnecessarily misleads American workers about the health of the Social Security program.
"Just as significantly, these statements could raise needless doubts among American and foreign investors about the United States' willingness to meet its fiscal obligations."
Blahous Takes Questions
Chuck Blahous, the White House's Social Security expert, took questions on the White House Web site yesterday. He didn't explicitly address whether the trust fund was worthless. But he did suggest a new link between the government's spending of the trust fund surplus and personal accounts:
"The President believes that surplus Social Security money should not be spent, which is one reason why he has proposed creating a system of personal accounts," Blahous wrote. "These personal accounts would save Social Security money, protecting it in the accounts of individual workers, where the government could not take it away."
Think of it as millions of little lock-boxes.
Blahous also said something that sounded kind of ominous, as far as young workers are concerned. Responding to a young person's question, he wrote: "The main difference between your situation, and that of today's seniors, is that today's seniors have already paid a lifetime of taxes into the Social Security program and have been counting on the benefits they have been ped. If there were a change to their benefits, they would not have the same opportunity to adjust, and to find another source of income."
The View on the Hill
Mike Allen and Peter Baker write in The Washington Post: "Stung by a spate of rowdy, critic-packed town hall meetings about Social Security over the Presidents' Day break in February, Republicans shied away from such open forums during the two-week Easter recess. Instead, they stuck mainly to workshops in which administration officials did most of the talking and lawmakers stepped up to answer a few questions after lengthy presentations from Bush appointees."
Valerie Plame Watch
Free-lance investigative reporter Murray Waas
writes in the American Prospect online this morning: "The special prosecutor investigating whether any Bush administration official may have violated federal law by leaking the identity of CIA officer Valerie Plame to columnist Robert Novak recently informed a federal court that his investigation has been 'for all practical purposes complete' since October 2004.
"The disclosure by special counsel Patrick J. Fitzgerald . . . [came] in explaining why he considered the testimony of reporters for The New York Times and Time magazine so essential to his inquiry. . . .
"Fitzgerald implied in the court papers that if he were able to obtain the testimony of both reporters, he would most likely be able to close out his investigation once and for all."
Waas writes that the new disclosures indicate that Fitzgerald appears unlikely to bring any criminal charges, and he speculates that Fitzgerald has already talked to Novak.
In the meantime, giving Waas credit for breaking the story -- although it hadn't actually come out yet -- Tom Brune writes in this morning's Newsday: "The investigation into the leak of an undercover CIA operative's identity to a columnist was 'for all practical purposes' completed in October, according to recent court filings by the special prosecutor. . . .
"The filing indicates that Fitzgerald is done with all materials he subpoenaed from the White House, all interviews with Bush administration officials, and even with columnist Robert Novak, who first published CIA operative Valerie Plame's name in July 2003, lawyers familiar with the case said.
"The filing, however, does not tip Fitzgerald's hand on whether he has determined if a Bush administration official or anyone else involved in the case has violated the law."
Waas, who also has a blog, is promising more Plame scoops in the days ahead.
Editor and Publisher reports: "President George W. Bush's approval rating has plunged to the lowest level of any president since World War II at this point in his second term, the Gallup Organization reported today.
" 'All other presidents who were re-elected to a second term had approval ratings well above 50 percent in the March following their re-election,' Gallup reported. Bush's current rating is 45 percent The next lowest was Reagan with 56% in March 1985." Click for the complete list.
Susan Page writes in USA Today: "President Bush seems to have slipped into a second-term slump.
"Support continues to erode for his signature goal of adding individual investment accounts to Social Security, according to a USA Today/CNN/Gallup Poll taken Friday and Saturday. The coalition that gave him four more years in office is showing signs of strain over the Terri Schiavo case. And Americans are increasingly distressed about gas prices and wary about his central justification for going to war in Iraq."
Bush's approval rating, however, is up three points over two weeks ago, to 48 percent.
In a separate story on values questions in the poll, Page reports: "Americans by 53%-34% say they disapprove of Bush's handling of the Schiavo case."
And: "By more than 2-to-1, 39%-18%, Americans say the 'religious right' has too much influence in the Bush administration."
Reps. Dianna DeGette (D-Colo.) and Raul Grijalva (D-Ariz.) have written a letter calling for a congressional investigation into Bush's bubble:
"We are writing to request that the Government Reform Committee investigate the recent incidents in which American citizens' First Amendment rights appear to have been violated at taxpayer-funded public event featuring President George W. Bush.
Ann Imse writes in the Rocky Mountain News: "Six of Colorado's nine members of Congress have criticized removing a person from a presidential appearance because of a bumper sticker -- the circumstances behind a highly publicized incident last month in Denver."
Meanwhile, liberal blogger David Sirota takes a stab at figuring out how much those trips cost.
Bush met with his Cabinet yesterday afternoon.
Bryan Bender of the Boston Globe reported to his press colleagues: "The pool was ushered into the sunlit Cabinet Room upon the order of a visibly jovial POTUS to 'unleash,' setting off a few chuckles among the cabinet members and aides seated around the table."
Here is the text of Bush's official comments.
No Need to Know Douglas Jehl
writes in the New York Times: "The White House is maintaining extraordinary restrictions on information about the detention of high-level terror suspects, permitting only a small number of members of Congress to be briefed on how and where the prisoners are being held and interrogated, senior government officials say.
"Some Democratic members of Congress say the restrictions are impeding effective oversight of the secret program, which is run by the Central Intelligence Agency and is believed to involve the detention of about three dozen senior Qaeda leaders at secret sites around the world."
The Presidents and the Pope
Kenneth R. Bazinet writes in the New York Daily News: "President Bush will be joined at the Pope's funeral by two former Presidents -- his father and Bill Clinton -- but there's no room for Jimmy Carter.
"Carter, who has been a harsh Bush critic, graciously withdrew, but made it clear he wanted to be included in the White House delegation . . . he was told there was no room for him."
Bush, his father, Clinton and others all took off from Andrews Air Force Base for Rome this morning.
Linda Feldmann writes in the Christian Science Monitor: "Never before has an American president attended a papal funeral, a signal of how much relations between the United States and the Vatican have evolved since Karol Wojtyla became Pope John Paul II in 1978. Some presidential critics are quick to see Mr. Bush's trip as yet another political appeal to religious conservatives in America. But just as easily, it is a journey that any American president would have made, given this pope's historic role in defeating European communism and in raising a global voice for morality during his 26-year reign, analysts say."
Bush is expected to spend tomorrow meeting with Italian leaders, and plans to leave Italy after the funeral to spend the weekend at his ranch in Texas.
At the Ranch
Adam Entous writes for Reuters: "President Bush said on Tuesday that he would press Israeli Prime Minister Ariel Sharon at their meeting next week to abide by a U.S.-backed road map peace plan that calls for 'no expansion' of Jewish settlements. . . .
"The settlement issue threatened to be the only sticking point in talks next Monday between Bush and Sharon at the U.S. president's Crawford, Texas, ranch."
The Wall Street Journal reports: "Saudi Crown Prince Abdullah is expected to meet with President Bush at his Texas ranch later this month to discuss a range of issues that likely will include high energy prices and the global war against terrorism."
Al Kamen writes in The Washington Post about a new Government Accountability Office report on public diplomacy that calls for the director of the Office of Global Communications to live up to the role outlined in Bush's executive order of Jan. 21, 2003.
"There's one small problem. There is no director of the Office of Global Communications. In fact, there is no such office. The OGC, which had been part of the White House communications operation, appears to have quietly drifted away sometime after releasing its last 'Global Message of the Day' on March 18."
In an excerpt from his new book, "The Vast Left Wing Conspiracy," National Review writer Byron York writes that in 2003, Democratic operatives obtained a copy of a top-secret Republican strategy plan authored by top White House political adviser Karl Rove.
The Fit President
Say what you will about his fitness for office, Bush undoubtedly is the most fit president ever in office.
Here he is yesterday in West Virginia: "One of these days I'm going to bring my mountain bike. (Applause.) I love to exercise. I'm doing -- I'm doing it to make sure that I do the job you expect me to do, and I'm doing it to set an example, as well. I think people need to get out all around our country, walk every day, or ride your mountain bike every day, get a little exercise every day. Stay fit and healthy. (Applause.)
"Speaking about staying fit and healthy, that's what we need to make sure we do for our Social Security system, too."