There is no crisis in Social Security but the president is doing everything possible to create a financial catastrophe to gin one up. This whole game reminds me of the hustlers in Times Square playing the Three Card Monte or find the pea under the cup (actually, because Times Square now resembles a mall that could be in Anytown, U.S.A., the hustlers have been sadly driven out, replaced by the usual consuming out-of-towners…with a few people from New Jersey scattered in…but I digress…). Masters of misdirection, these Bush folks are.

It works this way, illustrated in economic-speak by my friends from the Economic Policy Institute in two reports, one about Social Security and Medicare and the other about the budget:

1. The Social Security and Medicare trust funds have always continued to operate even when money coming in was less than the money going out. For example, Medicare has had less cash coming in the last two years but has not been declared to be in crisis. BUT…

2. Bush continues to present budgets with huge tax cuts (filling the pockets of the well-off in society) that are creating huge budget deficits. So, while we are told to focus on the “crisis” in Social Security, the real problem is that Republicans are intentionally bankrupting the government. I’m not a deficit hawk but the level of deficits this president is creating is a serious problem because the shortfalls are being generated not to build bridges or invest money in education but, rather, to finance tax cuts for rich people. Then what happens is…

3. A crisis in government down the road. The growing debt, whether we like it or not, is a problem because to pay off the debt, more of the budget has to go to interest payments (and the markets already got spooked by a recent rumor that the Japanese were pulling investments out of the American dollar because of the U.S. fiscal mess). As that pressure grows, the pressure will grow to make deep, severe cuts in the budget–long after Bush retires to his ranch. And…

4. So, as EPI writes, “The likelihood remains that a continuing failure to forgo tax increases, defense spending restraint, and comprehensive, structural health care reform moves the Bush Administration’s own projection of an unsustainable fiscal policy from the realm of prophecy to that of certainty.” Translation: the shit is going to hit the fan. And the Republicans will get their wish–crippling government by cutting off revenues, essentially guaranteeing benefit cuts.

Bottom Line: Any benefit crisis is being created by Bush’s tax cuts, not by any shortfall in revenues coming from payroll taxes that workers pay into Social Security or by the fiction of the retirement of the baby boomers. We don’t need to privatize Social Security. We need a sane tax policy (i.e., a return to a modestly progressive taxation system where the rich pay the share they paid just a few years ago) and, then, we would face no crisis at all.