In part one of this series, I outlined the Democrat lies about former president George W. Bush with regard to the Iraq war and the WMDs that were not found. I also refuted the Democrat lies about the Bush tax cuts.
In the following paragraphs, I will outline another liberal lie about George W. Bush. It’s the allegation that President Bush borrowed from Social Security to fund the Iraq war and his tax cuts.
We all know that anytime a Republican president cuts taxes, liberals scream to the top of their lungs that it’s a tax cut for only the very wealthy. Not true and I refuted this in part one of this series.
In summary, the Democrats are saying that President Bush spend every dime of Social Security surplus revenue that came in during his presidency. He used it to fund his big tax cuts for the rich, and much of it was spent on wars.
This is what really happened. For about 50 years, Social Security was a “pay as you go” system, meaning annual payroll taxes pretty much covered that year’s benefits’ checks. Then in 1982, President Ronald Reagan enacted a payroll tax hike to prepare for the impending surge of retiring baby boomers, and a surplus began to build.
By law, the U.S. treasury is required to take the surplus and, in exchange, issue interest-accruing bonds to the Social Security trust funds. The Treasury, meanwhile, uses the cash to fund government expenses, though it has to repay the bonds whenever the Social Security commissioner wants to redeem them.
In this broad sense, President Bush technically “borrowed” Social Security surplus to pay for the Iraq war. But even if this loose definition is used, we still run into a few issues.
The amount that President Bush borrowed is actually around $708 billion, and little more than half of the $1.37 trillion the Democrats have alleged. While around $1.52 trillion in bonds was added to the trust fund from 2000 to 2008, the Treasury only has access to the cash revenue collected every year, not the interest accrued on the entire surplus.
Second, President Bush didn’t exclusively spend it on the war, which has an estimated cost of $1.7 million. Other big costs include the financial bailout in 2008, something the liberals should be cheering, since their guy, Obama, carried on the bailouts.
The cash that the Treasury received from the Social Security surplus was not earmarked for any specific government program, according to Andrew Eschew, a former Social Security research analyst at the U.S. Government Accountability Office and current spokesperson for the Center on Retirement Research at Boston College. The larger question is whether the existence of the surplus influenced Congress’ spending decisions. But Eschew pointed out that no one can prove what was on the lawmakers’ minds. He further indicated that the idea that lawmakers consciously thought they could only go into Iraq because of a surplus was a stretch.
Eschew concluded that if we characterize the entire trust fund system as the government borrowing from Social Security, Bush was by no means the only debtor. By law, the Social Security surplus is converted into bonds, and the cash is used to pay for government expenses. If we agree then this is borrowing, that every president since 1935 has done it to fund all sorts of items. Even if Bush borrowed from the surplus, the amount is more like $708 billion and the borrowing wasn’t earmarked for a special purpose.
As for not paying back, the bonds won’t need to be repaid until 2020.
Politifact.com provided the material for this post.