When Peter Coy, the Bloomberg Businessweek Economics Editor, appeared this morning on "Washington Journal," he brought along a chart for his discussion of the magazine's cover article, "Why the Debt Crisis is Even Worse Than You Think."  But, the chart, purported to show a national fiscal gap, did not match Coy's talking points. As Coy concluded commenting that cuts would be needed to Social Security and other entitlements, C-SPAN moderator Susan Swain pointed out that Coy's chart showed a long-term surplus for Social Security of $22 trillion. Coy confirmed  as accurate her interpretation of the chart and, after some stumbling, admitted that, "The trust fund is not the crucial issue."  Indeed, his own figures show that it is not an issue at all. So, why did he continue to insist that Social Security cuts are needed?

If Bloomberg's analysis of the "fiscal gap" is correct, any cuts to Social Security benefits will simply increase the already project surplus of $22 trillion.  That surplus would is highly vulnerable in a "debt crisis" to being purloined to cover the $212 trillion gap resulting from other government expenditures. That would make Social Security, at least in part, a regressive tax program for general expenditures, because lower income workers pay a higher rate than those with high incomes.

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