Gene Epstein‘s latest “Economic Beat” column in Barron’s explores the impact of the frequent misuse of language in political and economic debates.
“THE SLOVENLINESS OF our language makes it easier for us to have foolish thoughts,” wrote George Orwell in his 1946 essay “Politics and the English Language.” A related essay on “Economics and the English Language” is long overdue, and could make it harder to have foolish thoughts about the economy.
Such an essay might, for example, cry foul at the use of the term “austerity” to describe prospective increases in government spending – and at the use of the label “American Taxpayer Relief” for a tax act passed early this year that resulted in no relief for any American taxpayer, and with tax increases for most. Such an essay might also marvel at that the persistent use of the term “trust fund” to describe the phantom sums, currently quoted at a whopping $2.7 trillion, supposedly held by the federal government to help pay for Social Security.
As far as the American taxpayer is concerned, there is no Social Security trust fund in the dictionary definition of the term. There might have been such a trust fund, however, had the government done things differently.
The trust fund is supposed to consist of the fruit of all the surplus money generated by the system’s payroll taxes over the past few decades. And it’s quite conceivable that, as with any pension fund to which future pensioners contribute, the money could have been invested in actual assets (say, sovereign debt of other industrial nations, plus high-rated corporate debt, foreign and domestic). And as needed, the government could sell those assets to meet the pension obligations.
But, as even those who insist there is a trust fund seem to know full well, the surplus money wasn’t invested. Instead, the federal government spent it all to cover its soaring outlays. All the money is gone.
