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October 28, 2000
Bush's Mysterious $40 Trillion

By Sam Parry

In the final days of Campaign 2000, George W. Bush has tried to counter Al Gore’s criticism of Bush’s Social Security privatization plan by tossing out a competing charge that Gore’s Social Security strategy would create a staggering $40 trillion budget debt by 2050.

“Forty trillion dollars is a lot of money,” Bush tells his supporters.

Yet, by not fully explaining this startling figure, Bush is guilty of using the number as a rhetorical gimmick to spread confusion about the differences between his and the vice president's Social Security plans.

Under closer examination, the $40 trillion figure appears to overstate the real dollar cost of Gore's plan by more than 400 percent. 

The mysterious $40 trillion surfaced after the third presidential debate as the Republican presidential nominee was grappling with Gore’s observation that Bush’s Social Security plan double-counts $1 trillion in budget surplus money.

In the debates and on the stump, Gore has noted that Bush applies the same $1 trillion from projected budget surpluses to pay near-term benefits to seniors and to give younger Americans a chance to invest Social Security money in the stock market.

While not directly rebutting Gore’s criticism, Bush accused Gore of exploiting the Social Security issue to “scare seniors into the ballot box.” As the campaign headed into its final two weeks, Bush tossed the $40 trillion figure into the mix, leaving many voters glassy-eyed over the competing figures.

But what exactly is Bush talking about? Despite the number’s shock effect, the national press corps has done little to get Bush to clarify his assertion.

When pushed, the Bush campaign references a letter dated Oct. 18 from the Congressional Budget Office to Sen. Pete Domenici, R-N.M., chairman of the Senate Budget Committee.

An attachment to that letter – given to us by the Senate Budget Committee – analyzes President Clinton’s proposal to shore up Social Security. The Bush campaign says this analysis can fairly be applied to Gore’s plan because it is similar to Clinton’s.

What the Bush campaign does not say is that the $40 trillion figure inflates fourfold the amount of actual dollars that would be transferred from the government's general budget surpluses to Social Security over the next half century.

The amount of actual dollars moved from one government pot to another – from the federal budget to the Social Security Trust Fund – over the 50 years would be $9.9 trillion, according to a table detailing the figures. That’s less than one-quarter the figure cited by Bush.

To boost the figure to $40 trillion, “cumulative interest on transfers” – totaling $30 trillion – is added, according to the table. The Bush campaign then rounds the $39.9 trillion to $40 trillion.

Essentially, the $40 trillion figure is achieved through an accounting device that applies an interest rate compounded annually, creating a rapidly accelerating figure in the later years. This might be a way for accountants to evaluate the long-term value of money, but it does not mean that the federal government would owe a debt.

Even referring to the actual $9.9 trillion transfer as a debt burden for the government is a suspect use of accounting terms. Under the plan, the money simply is moved from one government account to another, from the Treasury's general fund to the Social Security Trust Fund. The money then would go to pay Americans who have contributed to the fund during their working years.

The Clinton administration and the Gore campaign also note that the $9.9 trillion base amount does not come from general revenues earmarked for other programs. Rather, it is generated from the expected savings on interest payments once the federal debt is paid off by 2012.

Freed from paying interest on the national debt, Clinton and Gore would dedicate some of those savings to the Social Security Trust Fund.

According to the budget analysis cited by the Bush campaign, the Clinton plan would begin transferring the interest savings into the Social Security Trust Fund in 2011, starting at $122.4 billion a year and increasing to a maximum of $257 billion by 2016. That figure would be maintained annually through 2050 to guarantee the solvency of the trust fund.

The analysis shows that the Clinton plan would transfer a cumulative total of $900 billion into the trust fund by 2015,  $3.4 trillion by 2025, $6 trillion by 2035, and $9.9 trillion by 2050, a fairly stable growth pattern.

The more dramatic $40 trillion figure, cited by Bush, is reached by counting the cost of accumulated interest that theoretically the U.S. government’s discretionary budget would be losing. Because of the compound nature of interest, those numbers accelerate in the later years.

By 2015, for instance, the total cumulative interest would be $100 billion. By 2025, that figure hits $1.9 trillion. By 2035, it’s $7.4 trillion. By 2050, this number quadruples to $30 trillion. Only through the calculation of this theoretical interest on money being moved from the Treasury to the Social Security Trust Fund does Bush get his outsized $40 trillion figure.

If extended much further into the future, this theoretical figure would become even more astronomical. It's a fanciful figure deserving the mocking reaction that greeted Doctor Evil's extortion demands in "Austin Powers: The Spy Who Shagged Me." Laughing at the demand for $100 billion, Tim Robbins playing the U.S. president from the 1960s declares, "That's like saying I want gazillion bagillion dollars."

Beyond Bush’s $40 trillion number, his Social Security position begs two other questions.

First, how would Bush shore up Social Security for the expected budget shortfalls that will be caused by retirement of the baby boomers? Second, why wouldn’t his plan for transferring $1 trillion to individuals for stock market investments hasten the day when the trust fund runs out of money?

Independent analysis of the proposal suggests that Bush’s plan would advance the date of the Social Security Trust Fund’s insolvency by as much as 15 years. To avoid this eventuality, Bush’s plan would seem to require structural changes in Social Security – reductions in benefits, delaying of retirement age, etc.

Yet, beyond stressing his philosophy of trusting the people over the government, Bush has offered no specific changes to the pay-out structure of Social Security.

He has vowed to put $1 trillion in private accounts managed by current workers. He also assures current Social Security recipients that their benefits will be covered by $1 trillion from the government's current budget surplus. But as Gore has pointed out again and again, that appears to be the same $1 trillion.

Instead of a thorough explanation of his Social Security plan, Bush has muddied the waters with his $40 trillion figure. He also has trusted that the national news media’s disdain for complicated details will spare him from the need to articulate a coherent answer to Gore's $1 trillion question.

Sam Parry is managing editor of

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