Geithner Fretted Over Social Security Deficits -- Before the Dog Whistle

In an election year, political-speak is done with dog whistles.

That’s the backdrop readers may want to use in understanding former Treasury Secretary Tim Geithner’s confession in his latest book about the talking-points memo he got for his Sunday morning TV appearances from Obama Administration official Dan Pfeiffer on not equating Social Security reform with deficit reduction. Pfeiffer suggested Geithner avoid talking about Social Security reform as helping to cut the deficit in order to send a calming “dog whistle” of a signal to the Democratic base that Social Security will not be touched, in order to keep voters in the tent.

Continue Reading Below

Because from the time Geithner sat down to run the U.S. Treasury in 2009 up until the president’s re-election campaign in 2012, he had taken to the media and to Congress to press for Social Security reform precisely because of its looming insolvency and its deleterious impact on the deficit. In his post as head of Treasury, Geithner was also the managing trustee for the Social Security fund and a signatory to reports about its looming insolvency.

A sample of just some of Geithner’s warnings about Social Security is found below.

In treating Social Security like a slush fund, the federal government has borrowed, spent and vowed to pay back the $2.5 trillion or so “surplus” in payroll tax revenue it has siphoned out of Social Security. The money has been spent but the federal government has promised to pay it back.

In 2009, trustees, including Geithner, for Social Security issued a bleak report indicating the fund would start taking in fewer tax revenues versus the benefits it will pay out starting in 2016, the point in time when the federal government has to start paying the fund -- meaning, taxpayers – back, with interest.

At that time in 2009, trustee reports also indicated Social Security will start to be depleted in 2033, at which point it will only be able to cover around 76% of benefits. As Social Security starts drawing down its surplus, the Treasury must either borrow more money, hike taxes, or cut spending to pay back that paper mountain of IOUs the federal government has stashed in Social Security.

Geithner was sufficiently alarmed about this problem to demand reform, given the impact on the federal deficit.

But watch how Geithner backed away from ringing those fire-engine-red alarm bells he had started clanging from 2009 through early 2012, as the 2012 presidential election loomed, and the government was locked in battles over the fiscal cliff, the debt ceiling -- and the out of control federal deficit, now at $17 trillion.

On being prepped for Sunday talk shows by Administration official Dan Pfeiffer: “I remember during one Roosevelt Room prep session before I appeared on the Sunday shows, I objected when Dan Pfeiffer wanted me to say Social Security didn’t contribute to the deficit. It wasn’t a main driver of our future deficits, but it did contribute. Pfeiffer said the line was a ‘dog whistle’ to the left, a phrase I had never heard before. He had to explain that the phrase was code to the Democratic base, signaling that we intended to protect Social Security.” -- from “Stress Test: Reflections on Financial Crises,” (Random House, 2014).

"The president explicitly rejects the notion that Social Security is untouchable politically,” and the administration intends to "work to build a bipartisan consensus to ensure the long-term solvency of Social Security" after it reaches consensus on health-care reform. -- 2009 (click here).

"Despite projections that Social Security can continue to pay full benefits for nearly 30 years, the sooner action is taken the more options for reform will be available and the fairer reforms will be to our children and grandchildren." -- 2009 (see here)

"We should not wait for the trust funds to be exhausted to make the reforms necessary to protect our current and future retirees. Larger, more difficult adjustments will be necessary if we delay reform." -- May 2011

Trust fund “reports emphasize the importance of building consensus on reforms that will put these programs on a sounder financial footing.” -- April 2012 (click here)

“In 2033, incoming revenue and trust fund resources will be insufficient to maintain payment of full benefits. At that point there will only be enough money to cover about three-fourths of full benefits.” -- April 2012 (see here)

Then suddenly, in a reversal, here is Geithner in December 2012 on pushing Social Security reform off the table:

GEITHNER: “What the president is willing to do is work with Democrats and Republicans to strengthen Social Security for future generations. So Americans can approach retirement with dignity and with the confidence they can retire with a modest guaranteed benefit. But we think you have to do that in a separate process, so that our seniors aren’t — don’t face the concern that we’re somehow going to find savings in Social Security benefits to help reduce the other deficits.

ABC NEWS’ GEORGE STEPHANOPOULOS: “So to be clear, that is one thing that is clearly off the table. Social Security is off the table in these negotiations.”

GEITHNER: “We are prepared to, in a separate process, look at how to strengthen Social Security, but not as part of a process to reduce the other deficits the country faces.”

Footnote: From FOX News’ Ed Henry: A source close to former Treasury Secretary Geithner tells FOX that he “does not believe he was encouraged to go out and mislead the public on the Sunday shows.”  The source tells FOX  that all the former Treasury Secretary was trying to say was that Pfeiffer wanted him to “send a signal” to liberals about the President’s commitment to not allowing major cuts to Social Security.

What do you think?

Click the button below to comment on this article.