I wrote a piece yesterday about how Fox News turned Timothy Geithner's new book into Benghazi, but in the piece I also highlighted something which Geithner wrote in his book that actually floored me about Social Security.
Republicans have been trying to say that Obama made Timothy lie before going on TV, which isn't true either, but the example they used highlighted how President Obama's treasury man doesn't know the first thing about how Social Security works and that's stunning.
Adam Edelman claims that the White House was forcing Geithner to lie about Social Security adding to the deficit on national TV.
Geithner, who led the Treasury Department from 2009 to 2013, said Obama administration officials routinely directed his talking points ahead of interviews scheduled on Sunday morning political talk shows.
"I remember during one Roosevelt Room prep session before I appeared on the Sunday shows, I objected when Dan Pfeiffer wanted me to say Social Security didn’t contribute to the deficit,” Geithner wrote in his new memoir, “Stress Test: Reflections on Financial Crises.” “It wasn’t a main driver of our future deficits, but it did contribute.
I'll do another post on Geithner's stupidity when it comes to Social Security, the budget deficit and his being head of Treasury. Social Security by law can't add to the budget deficit, but he believes it still does?
Social Security by law cannot add onto the budget deficit. It doesn't work that way. Here's Dean Baker:
Under the law, Social Security is financed by a designated tax, the 12.4 percent payroll that workers pay on their first $107,000 of income each year. The money raised through this tax is used to pay benefits. Any surplus is used to buy U.S. government bonds. All funding for the program comes either from this tax or from the bonds held by the program’s trust fund. (The Social Security system is also is credited with a portion of the income tax paid on Social Security benefits.)
Social Security is prohibited from spending any money beyond what it has in its trust fund. This means that it cannot lawfully contribute to the federal budget deficit, since every penny that it pays out must have come from taxes raised through the program or the interest garnered from the bonds held by the trust fund.
I'll say it again. How could Geithner not know this? Obama picked this man to lead us out of a financial crisis and he is clueless on a major program that has been attacked over and over again by Republican politicians and pundits, who want to cut benefits after bailing out Wall Street and then privatize it.
Michael Hiltzik writes: What Tim Geithner doesn't know about Social Security is ... shocking
We're more interested in a nugget in which Geithner demonstrates that he didn't actually understand how Social Security works or its paramount importance to the way most Americans -- those who aren't rich bankers -- live. This is especially shocking because as Treasury secretary, Geithner served as an ex officio Social Security trustee.
The answer is, bluntly, no. By law, it can't contribute to the federal deficit, because Social Security isn't allowed to spend more than it takes in. Those who claim -- as Geithner has at one point or another -- both that the program contributes to the deficit yet will be forced to reduce benefits to retirees once its trust fund is depleted are trying to have things both ways: The reasoning behind the threat of reduced benefits is that Social Security can't engage in spending money it doesn't have, i.e., deficit spending.
Pick one, fellas. If it can contribute to the deficit, then there's no reason to cut benefits.
By blaming Social Security for even a portion of the deficit, Geithner underscores what some reviewers of his book point to as his self-identification with the investment and banking communities. He's now president and managing director of the Wall Street firm Warburg Pincus.They love to point at Social Security as a guilty party in the deficit, because they know that if they can't blame Social Security recipients for the deficit, the blame will fall on them. But Geithner knows better. Or at least, he should know better. What's his excuse for pretending he doesn't?
Duncan calls him The World's Worst Human and who could argue with that?