Let's imagine that Wall Street investment banker and long-time Social Security foe Peter Peterson had $1 billion in government bonds (also known as "IOUs"). Suppose that he decided to sell them. According to Glenn Kessler, the Washington Post's fact checker, this would create a burden for the U.S. government.This sale of bonds would displace other bonds that the United States might want to sell in the financial market. This would lead to higher interest rates on U.S. debt. Therefore Mr. Peterson is contributing to our deficit problem.That may seem more than a little silly to readers, which it is. Yet, this is the same way in which Kessler says that Social Security will be creating a fiscal burden. The program has bought $2.6 trillion in government bonds which are part of the $14.3 trillion debt subject to the debt ceiling. It will be relying on the interest from these bonds to pay for some benefits for then next decade, just as Mr. Peterson may use interest from government bonds that he holds to pay for his living expenses or funding his anti-Social Security agenda.After 2022 the program will begin selling off its bonds. This will have the same effect on the market as if Mr. Peterson were selling his bonds. In Peterson's case he will directly sell his bond into the market, in the case of the Social Security program it will sell a bond to the government which will have to get the money by selling a new bond in the market (unless it raised taxes or cut spending to cover the price of the bonds).Kessler also gets wrong the baseline for the projected longer-term shortfall for Social Security. After 2036 the program is projected to only have enough money to pay a bit less than 80 percent of scheduled benefits. However, if the law is never changed, then the program would only pay the ...

Originally posted at the GuardianThe conventional wisdom among the current generation of school reformers is that bad teachers are to blame for the failure of many of our children to learn. Applying this logic to the current debates over the budget and the economy, we should be pointing a big finger of blame at the media.As survey after survey shows, the vast majority of the public are incredibly ignorant of the most basic facts about the budget and the economy. If we treated their teachers in the media the way the educational reformers treat public school teachers, few economics and budget reporters would have jobs.One needs only to pick up a newspaper or turn on the television to get examples of thoroughly awful reporting. When we hear pledges to reduce the projected deficits over the next 12 years by $2 trillion or $4 trillion, how many people have any clue how large these reductions are relative to projected spending or projected GDP over this period? (The $4 trillion figure is 8.7 percent of projected spending and 3.7 percent of GDP.)How about that $14.3 trillion figure? That’s a really big number, really scary. So is just about every number connected with the United States budget. We are a huge country with a huge economy. Competent reporters would focus on this being about 90 percent of U.S. GDP.Is that big? Well the debt-to-GDP ratio was over 110 percent after World War II. The United Kingdom had debt-to-GDP ratios of more than 100 percent for much of the 19th century as it was establishing itself as the world’s pre-eminent industrial power.Japan has a debt-to-GDP ratio of more than 220 percent of GDP and can still borrow in financial markets long-term at interest rates of less than 1.5 percent.  So, what’s the problem? ...

Robert Samuelson did one of the great pox on both your houses pieces at which the Post excels. He criticized the right, as personified by Grover Norquist, for being unwilling to raise taxes. Then he trashed my friends at the Center on Budget and Policy Priorities for refusing to produce a balanced budget, which he argues would have to show large cuts in Social Security and Medicare.Those of us who don't work for the Post, and therefore are free to speak honestly about the deficit, know that the whole long-term deficit problem is the story of the broken U.S. health care system. If the United States paid the same amount per person for its health care as people in any other wealthy country we would be looking at long-term budget surpluses, not deficits.Of course the short-term deficit story is about the downturn caused by the collapse of the housing bubble, which the Post apparently still has not noticed.

Usually it is the politicians who use euphemisms to try to conceal the impact of their policies. However, the Washington Post decided to help them along in a front page article when it twice referred to Social Security "changes" that could be part of the budget agreement.Of course "changes" don't reduce the deficit unless they are cuts. President Obama and the congressional leadership were discussing plans to cut Social Security. These cuts are likely to be very unpopular, so it is likely that they would rather have the public not realize that they were debating cuts to Social Security.Since the Post's editorial position also supports cuts to Social Security, the paper apparently decided to help the politicians along in this effort. This is why the Post is known as Fox on 15th Street.Interestingly, the Post never once referred to tax "changes," rather than increases. It even allowed Don Stewart, Senate Minority Leader Mitch McConnell’s deputy chief of staff for communications, to refer to "massive tax increases," without pointing out that none [thanks Jim A.] of the tax increases put forward by President Obama would raise taxes above their late 90s level when the economy was adding 3 million jobs a year.Washington Post reporters have the time to look up tax increases and assess their importance. Washington Post readers do not.

I know we are not supposed to say "lie" in Washington, but this is really get tiresome. There was no report from President Obama's deficit commission. The rules under which the commission could issue a report were very clear. It had to have the support of 14 of the 18 members in a vote that took place by December 1, 2010. There was no vote taken by that date, although 12 of the 18 members did indicate their support for a report produced by the commission co-chairs, Erskine Bowles and Alan Simpson, on December 2.This means that there was no commission report. Therefore, when Dan Balz tells Washington Post readers about the recommendations of the deficit commission, he either has no clue what he is talking about or he is deliberately deceiving Washington Post readers. If he wants to be honest, he is welcome to refer to it as a report of the co-chairs and to even point out that the report had support of 12 of the 18 commissioners, but it is simply not accurate to describe it as a report of the commission.Btw, the headline of the piece describes the failure to reach agreement on a big deficit reduction package as a "lost opportunity." Those reading through the piece would find that one element of this lost opportunity is the failure to raise the age of eligibility for Medicare. Wow, just think, if only Speaker Boehner and President Obama could have gotten their act together people aged 65 and 66 could now be paying for their own health care. We're all really going to regret this lost opportunity.