As some politicians describe it, the Social Security program is an economic disaster forced upon younger generations by the demands of greedy baby boomers. News media obediently parrot the scare stories, seldom questioning the math in a story that is all about the numbers. A rare departure from that script occurred on July 29 when an alert Washington Journal moderator stalled a Businessweek editor’s argument for Social Security cuts by observing that the data he brought with him showed a projected Social Security surplus.[C-SPAN Video: Washington Journal, July 29, 2011. Interview begins at the 28-minute mark.]
Bloomberg’s Peter Coy was on the program that day to discuss his article, Why the Debt Crisis is Even Worse than You Think. Coy described a long-term “fiscal gap” of $211 trillion dollars, which he explained is “the difference between tax revenue…and everything we expect to spend.” His published article provides a bit of additional explanation.
A more revealing calculation is the [Congressional Budget Office’s] measurement of what’s called the fiscal gap. That figure is conceptually cleaner than the national debt—and consequently more alarming. Boston University’s Kotlikoff has extended the agency’s analysis from 2085 out to the infinite horizon, which he says is the only method that’s invulnerable to the frame-of-reference problem.
Social Security, Medicare and Medicaid entitlements bear most of the blame for the $211 trillion shortfall, Coy said. As he spoke, C-SPAN moderator Susan Swain pointed to the article’s accompanying chart of the data, entitled “The Debt Deluge.” Seconds later, the wheels came off Coy’s talking points.“You’re saying Social Security is part of the solution,” commented Swain. “[But], in this illustration…it shows Social Security with a surplus…right?” She pointed to the chart where it clearly indicated a Social Security debt of $110 trillion and projected Social Security receipts of $132 trillion.“ Am I reading that correctly?” Swain asked politely.
Weakly, Coy answered, “Yeah.” After fumbling for a better response, he concluded by telling Swain that he would look again at the data and provide an explanation the following week. But, the following week, Ms. Swain was not there–a male moderator appeared, instead. Coy did not revisit the $22 trillion surplus and did not offer a correction. Read more
Some of the shriller Fed critics offer simple but misleading slogans like “The Federal Reserve is a private entity” and “The Fed isn’t audited.” The truth is more complicated, and the historical background matters for citizens trying to understand why, how, and how well the recent GAO audit of the Federal Reserve was conducted.
Twenty years later we had the worst banking crisis in our nation’s history, the product of a few forces including Federal Reserve policy itself. We added a new government agency, the Federal Reserve Board, to ‘govern’ the government-chartered but member-bank ‘owned’ Federal Reserve Banks. We added a new Federal Deposit Insurance Corporation on top of the Federal Reserve as another means to try to instill and maintain depositor confidence in banks. We also added a similar Federal Savings and Loan Insurance Corporation for the banks’ sister industry. In 1970, after a euphemistically-named ‘paperwork crisis,’ a new Securities Investor Protection Corporation was created to stand behind investor accounts at securities firms.
In the spring of 2010 the Carnegie Corporation issued a 
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