More word games at PolitiFact: voucher edition

On June 5, 2016, we reviewed PolitiFact's position, contrary to what economists write in published journals, that Social Security's "pay-as-you-go" financing is not a Ponzi game.

With this post, we'll see that PolitiFact adopts a different approach to the use of words when the term is "voucher."

Surprise! The inconsistency works against Republicans in both cases.

PolitiFact Wisconsin fact-checked a claim by the Democratic Party of Wisconsin that Republican Senator Ron Johnson voted to turn Medicare into a voucher program. PolitiFact Wisconsin rated the claim "Mostly True," ignoring the fact that the plans Johnson voted for involved no vouchers. Vouchers are pieces of paper representing value that will be covered by the government.

PolitiFact Wisconsin's explanation is priceless:

Our colleagues concluded that, although there are technical differences between voucher and premium supports that may matter to health policy professionals, the two definitions have become almost indistinguishable and voucher program is a fair description for what Ryan proposed.

It makes perfect sense to us that left-leaning PolitiFact staffers would accept that "voucher" is "almost indistinguishable" from "premium support. After all, who cares what health policy professionals think? What matter is what PolitiFact thinks.

So we move to the natural question: Did PolitiFact conclude that the terms were "almost indistinguishable" based on sound evidence? PolitiFact Wisconsin provided a source list featuring a number of PolitiFact stories, so we looked there for the evidence PolitiFact Wisconsin neglected to include in its story. We will review them for their evidence in chronological order.


PolitiFact National, Aug. 16, 2012

The differences between vouchers and premium support may matter to health-policy professionals, but not necessarily to a general audience. And while the 1995 Aaron-Reischauer paper may have offered a detailed definition for "premium support," language tends to evolve over nearly two decades.

The above essentially repeats the assertion that the terms have converged in meaning over time for the general audience. The fact check does elaborate on the argument. That elaboration takes the form of finding similarities between vouchers and premium supports, followed by having a pair of experts say it's reasonable to use "voucher" for "premium support." That is an approach PolitiFact could have applied to Ponzi schemes, but did not.

In fact, the fact check overlooks an obvious underlying Democratic argument. The fact check acknowledges that Republicans don't like the term "voucher" applied to the Medicare reform plan. But if the terms are interchangeable to the general audience then why would they care? Why would Democrats care, for that matter? We think people associate "voucher" with receiving a piece of paper and then having to go through the trouble of redeeming it. The perceived inconvenience accounts for the negative connotation the Democrats wish to pin on the Republicans' attempts at Medicare reform.

The Democrats are manipulating words to exaggerate inconveniences from a premium support system.

PolitiFact New Jersey, Sept. 10, 2012

PolitiFact New Jersey accepts and repeats the original argument from PolitiFact National:

As our PolitiFact colleagues noted, there are distinctions between the two terms, dealing with the type of inflation adjustment used and the degree of marketplace regulation imposed. Ryan’s most recent plan more closely reflects a pure premium support, but substantively, it’s somewhere between the two approaches. 

Henry Aaron, a senior fellow of economic studies at the Brookings Institution, a policy think tank, told PolitiFact National "that premium support is a type of voucher."

PolitiFact New Jersey adds nothing substantial to the argument.

PolitiFact National, Oct. 3, 2012

Less than a month later, PolitiFact National again recycled its earlier argument:

In the past, PolitiFact has found Obama’s "voucher" characterization reasonable, though as Obama noted, Republicans prefer "premium support."

Merriam-Webster defines a voucher as "a written affidavit or authorization … a form or check indicating a credit against future purchases or expenditures; a coupon issued by government to a parent or guardian to be used to fund a child's education in either a public or private school."

The plan pushed by Romney’s running mate, U.S. Rep. Paul Ryan, isn’t exactly a coupon, but it’s not so far off.

May it never be that "Social Security isn't exactly a Ponzi scheme, but it's not so far off."


PolitiFact New Jersey, Oct. 5, 2012

PolitiFact New Jersey stuck with the same mantra two days after PolitiFact National's "Mostly True" for President Obama:

Menendez’s claim is mostly accurate.

Ryan has proposed providing "premium support" payments to future Medicare beneficiaries to purchase health insurance. There are some distinctions between the two terms, but the word "voucher" generally describes this approach.

Again, the fact check contains no new reporting. The source list simply features the interview from which PolitiFact New Jersey pulled the claim it checked along with two earlier PolitiFact fact checks. That's it.

PolitiFact National, Nov. 19, 2013

In 2013, PolitiFact National finally added some new reporting. It's worth noting that the new reporting included another example of the "Ignore the Conservative Expert" game PolitiFact plays from time to time (bold emphasis added):

Yuval Levin, a health policy expert at the conservative Ethics and Public Policy Center told us he wouldn’t consider the proposal a voucher system at all.

There’s definitely debate over semantics, but to the average voter (if not the average policy wonk), it seems like the word "voucher" would accurately describe the basics of Ryan’s proposal (which, by the way, doesn’t sound all that different from the healthcare.gov marketplaces for the uninsured). Calling programs like this "voucher systems" has been common in the field for years without negative connotations, Van de Water said.

The conservative expert disagrees with the others (liberals?)? The solution is simple. Ignore the conservative. The Democrat gets a "Mostly True" rating because "'voucher system' is the colloquial way to refer to a program that gives people credit to purchase something."

No matter how many economists refer to pay-as-you-go financing as a "Ponzi game," PolitiFact will not acknowledge that the characterization is anything better than "Mostly False" (thanks for nothing, PolitiFact Wisconsin).

It's just one more example of PolitiFact's inconsistency favoring the liberal point of view.


Afters:

PolitiFact Wisconsin deserves special recognition for dinging Sen. Johnson with a "Mostly False" for comparing Social Security to a Ponzi scheme and giving an attack ad against Johnson a "Mostly True" since vouchers are (allegedly) pretty much the same as premium support.

PolitiFact's inconsistent approach to the proper use of terms is a disgrace to fact-checking.

PolitiFact recycles garbage: "False" that Social Security is a Ponzi scheme

Are the fact checkers at PolitiFact inept? Intentionally deceitful? Both?

Jeff and I chat about that issue from time to time. We try to give people the benefit of the doubt, but PolitiFact makes this one a tough call.

The latest challenge to our attempt to see the best in the people at PolitiFact? They're misleading their readers with their recycled garbage about Social Security's financing structure. On Facebook, PolitiFact reminded readers they should remember and believe PolitiFact's flawed fact checks from the past:

What are the "several reasons" PolitiFact uses to deny the similarity?

PolitiFact uses Mitchell Zuckoff, a journalist who wrote about Charles' Ponzi's original ripoff, as its go-to expert. Let's examine the features supposedly distinguishing Social Security from a Ponzi scheme.

"First, in the case of Social Security, no one is being misled," Zuckoff wrote in a January 2009 article in Fortune. "Social Security is exactly what it claims to be: A mandatory transfer payment system under which current workers are taxed on their incomes to pay benefits, with no promises of huge returns."

People are being misled into believing that Social Security's financing is solid, so we challenge Zuckoff's claim that no one is being misled. But, more to the point, Ponzi himself would have had no need to mislead his victims if he shared the government's power to force participation. As Zuckoff notes, Social Security is a mandatory transfer payment system. This can't count as a critical distinguishing difference, for Ponzi would have leaped at the chance to force participation in his scheme.

Second, he wrote, "A Ponzi scheme is unsustainable because the number of potential investors is eventually exhausted." While Social Security faces a huge burden due to retiring Baby Boomers, it can be and has been tweaked, and "the government could change benefit formulas or take other steps, like increasing taxes, to keep the system from failing.

Here, Zuckoff is flatly wrong. A Ponzi scheme can have the same number of potential investors as Social Security. The trick is getting potential investors to turn into actual investors. Zuckoff's second difference maker is the same as the first, on examination: Ponzi had to lure new investors with false claims. He would have preferred the convenience of Social Security's mandatory participation.

Third, Zuckoff wrote, "Social Security is morally the polar opposite of a Ponzi scheme. ... At the height of the Great Depression, our society (see 'Social') resolved to create a safety net (see 'Security') in the form of a social insurance policy that would pay modest benefits to retirees, the disabled and the survivors of deceased workers. By design, that means a certain amount of wealth transfer, with richer workers subsidizing poorer ones. That might rankle, but it's not fraud."

The third difference, Zuckoff says, is that Social Security is good while Ponzi schemes are bad. We see two foundations for Zuckoff's claim. The first is ideological. Zuckoff takes it as axiomatic that the morality behind Social Security is superior to the morality behind Ponzi schemes. We think it's hard to base an objective finding of fact on the presumption of moral superiority. The second foundation of Zuckoff's argument comes again from his first point: Social Security, unlike a Ponzi scheme, is not fraud. As we pointed out above, Charles Ponzi would have loved to make mandatory participation a feature of his scheme.

That's it. Those three (a bit short of two after winnowing) reasons supposedly make it "False" that Social Security is a Ponzi scheme.

PolitiFact includes comments from CATO Institute's Michael Tanner. Tanner affirms a similarity between Social Security and a Ponzi scheme, while noting some differences. PolitiFact makes those comments a footnote, so the similarities are de-emphasized in the story and ignored in the final ruling.

Ultimately, the thing that keeps Social Security from being a Ponzi scheme in PolitiFact's eyes is a feature that Ponzi would have loved to include: the power to keep new money coming in through mandatory participation. If Ponzi had that power and were alive today, he could still be making money off of new investors.

PolitiFact shows its bias by ignoring the similarities Tanner points out and by making the power to force participation the line of demarcation between Social Security and Ponzi schemes.

There's also the issue of ignored evidence. Professional peer-reviewed journals routinely refer to Social Security's "pay-as-you-go" financing as a Ponzi game or Ponzi scheme. We offer one example among many:

In an unguarded moment 30 years ago, Nobel Laureate Paul Samuelson captured the reasoning undergirding this approach to public finance:

The beauty about social insurance is that it is actuarially un-sound. Everyone who reaches retirement age is given benefit privileges that far exceed anything he has paid in.... Social Security is squarely based on what has been called the eighth wonder of the world--compound interest. A growing nation is the greatest Ponzi game ever contrived. And that is a fact, not a paradox.

With below-replacement fertility and increasing longevity, however, the arithmetic of pay-as-you-go retirement programs changes unforgivingly. As the ratio of employees to retirees falls, a universal pay-as-you-go retirement system has only three options for preventing bankruptcy: reduce pension benefits; raise taxes; restrict eligibility. There are no alternatives.

Should you trust the fact checker that overlooks and denies by omission this part of the story? How does a competent fact checker fail to find Social Security's pay-as-you-go financing described abundantly in professional literature as a Ponzi game?

We don't know the answer to that question. Maybe PolitiFact knows.


Afters:

The similarities CATO's Michael Tanner pointed out between Social Security and a Ponzi scheme amounted to a "False" rating. But PolitiFact found it "Half True" that President Barack Obama's signature health care reform, the so-called Affordable Care Act, was the Republican health care proposal from 1993.

The Republican bill must have been much more similar to Obamacare than Social Security is to a Ponzi scheme, right? Judge for yourself.

Our take? PolitiFact is magnificently inconsistent. And the inconsistency tends to favor the political left, as in this case.

Anchor Rising: "Rating of John Loughlin on Social Security: PolitiFact's Truth-O-Meter Earns Itself a 'Pants on Fire'"

Blogger Monique Chartier of Anchor Rising noticed when PolitiFact failed to admit that Social Security is a Ponzi scheme:

Here's the definition of a Ponzi scheme.

A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors.

Here's how social security works.

The Social Security system is funded primarily by federal taxation of payrolls.

Doubtless PolitiFact might defend itself by noting that "fraud" occurs in Chartier's definition of "Ponzi scheme."  The PolitiFact argument insists against the evidence that Ponzi schemes require fraud in order to fit the proper definition.

But that's only true if we cherry-pick the definition.

Chartier's criticism hits its mark, but would have more force if she pointed out that fraud is not a necessary feature of Ponzi schemes and Ponzi financing.