Tuesday, February 22, 2005

You say "Social Security", I say "cash cow".

Commenter Dave,
over here, brings up a point made a number of times across the blogosphere -- that it's simply implausible that the Bush administration will "default" on its debt to Social Security because the U.S. Constitution simply bars that kind of behaviour. Josh Marshall, over at Talking Points Memo, has made that very point but, somewhere, I recall reading a fairly well-reasoned rebuttal that maybe it's not all that cut and dried, so I'm going to reserve judgement on it. Certainly, at face value, the Constitution doesn't seem to allow for that.

But there's another point that I think is being missed in all of this. Read WaPo regular columnist and frothing, conservative nutbar Charles Krauthammer:

Let's start with basics. The Social Security system has no trust fund. No lockbox. When you pay your payroll tax every year, the money is not converted into gold bars and shipped to some desert island, ready for retrieval when you turn 65. The system is pay as you go. The money goes to support that year's Social Security recipients. What's left over is "lent" to the federal Treasury. And gets entirely spent. It vanishes...

Make sure you understand what Krauthammer is saying here: that if SS is running an excess -- that is, more income than outgo -- then, hey, it's party time for the rest of government, whoo hoo, look at all that spare cash, tax cuts for everyone!

But the instant SS starts to run a deficit, suddenly it's, fuck you, SS, don't come crying to us for help, you're on your own. I'm curious why no one seems to be mentioning that little fact.

BONUS TRACK: Have you ever noticed that, whenever a right-wing wanker starts off with "Let's start with basics" or "Let's start with the facts", you just know that what you're about to hear will be total bullshit?


dAVE said...

Ate my comment, damn!

Anyway, as I was saying, thanks for referencing my comment.

Constitutional issues aside, imagine what would happen if the US Gov't did default on the Social Security trust fund. The trust fund is in the form of government bonds. If the gov't defaults on those bonds, it would send a signal to all holders of US government bonds (such as the central banks of China, Japan, and various European countries) that the US Government might not make good on their bonds.
That would be very very bad.

Dizzy Gillespie said...
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