Amid the frenzy over a budget surplus that hasn't even appeared yet, President Clinton's recent budget proposal is notable for its sobriety.
The idea, you'll recall, is to devote every surplus dollar to reducing the national debt. The president would then credit that reduction to the imperiled Social Security trust fund.
In short, the president seems to have struck that rare combination of good politics and good policy. On the one hand, debt-reduction preempts wanton tax-cutting initiatives with a potent fiscal morality. On the other, the solution to our Social Security morass turns out to be utterly painless.
Which leaves one question. If the president can at once thwart Republican tax cutters, reduce the national debt, and save Social Security, then why is the administration now equivocating?
The answer, of course, is that the numbers just don't add up.
Consider Social Security first. What probably comes to mind when you hear the phrase "trust fund" is some inscrutable vault into which payroll contributions disappear. In fact, there is neither a vault nor much of a fund.
While Social Security does run a surplus, the surplus revenue is used to purchase government debt as soon as it arrives. This enables the government to fund an assortment of other programs - everything from B-52s to school lunches - but leaves Social Security only a massive I.O.U.
Yet as long as Social Security continues to run a surplus, this is nothing to lose sleep over. Social Security taxes will suffice to fund retirement benefits and the programs that rely on its revenues.
The problems begin when this annual surplus disappears. At that point, Social Security will have to redeem its trust fund assets to cover a steadily increasing deficit.
This means the government must pay back the money it borrowed from Social Security, placing enormous strain on the rest of the federal budget. But even assuming the government fully repays, the trust fund's assets (the amount of the I.O.U.) will only sustain Social Security until 2029. It is this date most analysts cite when warning of imminent collapse.
How does the Clinton proposal fit into all of this? Quite simply, it doesn't.
Though future budget surpluses would accumulate in a special Social Security reserve, that reserve would only exist on paper, which is where the connection to Social Security ends. In reality, the surpluses would be entirely devoted to paying down the national debt, leaving the Social Security trust fund in no better shape than when we began.
Moreover, even if it were possible to "credit" Social Security with a reduction in the national debt, the president would at best be promising to pay back what the government has owed all along. The entire debate over Social Security already takes that money for granted. Were that repayment not to occur, Social Security would go belly up not in 2029, but at the moment it began to run a deficit in 2013.
So the Social Security part doesn't quite pan out. Clinton's proposal still earns points for debt reduction, right?
Well, not exactly. The budget that will be in surplus is what's known as the unified budget. That includes Social Security revenue, which accounts for an annual inflow of tens of billions of dollars. But leave out Social Security and, according to the Congressional Budget Office, the federal budget will remain $60 billion to $125 billion in deficit in each of the next 10 years.
This in mind, look again what Clinton is proposing. The plan involves using excess Social Security revenues (the ostensible budget surplus) to pay down the national debt. Yet because the government is simply borrowing from Social Security - and must ultimately pay it back - our total stock of debt doesn't change. It becomes a bit like paying your mortgage with a credit card.
To illustrate, suppose Social Security runs a $100 billion surplus next year, and the rest of the budget runs a $75 billion deficit. By our current accounting practices, the overall budget would show a $25 billion surplus. Now, as described above, the $100 billion Social Security surplus gets loaned to the government. The government uses this money to cover its $75 billion deficit.
Finally, under Clinton's proposal, the government's remaining $25 billion "surplus" is used to pay down the national debt. But because the government borrowed $100 billion from Social Security to begin with, the net effect is still to increase the federal debt by $75 billion - the $100 billion originally borrowed from Social Security less the $25 billion now being paid off. Confusing? It should be. That's the idea.
But, you insist, surely there's some merit to the president's proposal. What about the politics? Fair enough. The president deserves credit for derailing premature tax cuts. On the other hand, indulging in the illusion of Social Security reform only undermines serious reform initiatives. And who knows? If we persist with the charade long enough, we just may succeed at doing nothing until there's nothing left to do.
* Noam Scheiber is adjunct policy analyst at the Government Accountability Project in Washington.