February 13, 2005 October is Koufax Pledge Drive month

Close The Barn Door

Why do you close the barn door after the horse has already gotten out? Perhaps because you do not want the cow and the mule to follow.

That is why I have a difficult time understanding George W. Bush’s position with regard to the Social Security Trust Fund.

President Bush apparently believes that the Treasury bonds held by the Trust Fund are simply worthless. On February 9, the President said the following:

Some in our country think that Social Security is a trust fund -- in other words, there's a pile of money being accumulated. That's just simply not true. The money -- payroll taxes going into the Social Security are spent. They're spent on benefits and they're spent on government programs. There is no trust.

That is true only if politicians like Mr. Bush decide to default on Treasury Bonds that carry the full faith and credit of the United States. Given that Mr. Bush thinks Treasury Bonds are worthless, one wonders how he plans to sell them to foreign banks and governments to borrow money to cover the budget deficit created by his policies.

Assume, for moment, that Mr. Bush actually believes that since 1983, the Social Security Administration has spent more than a trillion and a half dollars of cold, hard cash buying Treasury Bonds that are just worthless paper.

According to the Congressional Budget Office for FY 2005, Social Security will run a surplus of $173 billion. In 2006, the surplus will be $190 billion. What does Mr. Bush propose to do with that cash? Does he plan to put into safe deposit box? Perhaps he intends to open a passbook savings account, or even a money market account.

Nope. Mr. Bush proposes to pay $263 billion of taxpayer’s cash this year and next for what he believes is worthless paper.

I have some sympathy for those investors who bought Enron stock believing the financial statements of the company. I have no sympathy for people who continued to buy the stock once Enron’s fraud was known.

If Mr. Bush really believes that the Social Security Trust Fund is worthless, is it not incumbent on him to stop giving away taxpayer money in exchange for worthless paper? Should he not live up to his 2001 promise not to spend the Social Security surplus on the normal operations of government?

Mr. Bush, who claims that his horse escaped out the barn door, is now standing aside to allow the cow and the mule to follow.

Mr. Bush’s actions make a lot more sense if one concludes that he does not really believe his own rhetoric.

Posted by Dwight Meredith at February 13, 2005 12:24 AM | TrackBack
Comments

This is one more onto the heaping pile of reasons to showcase that the Bush administration really has no idea what they're doing. Is there an economist in the house?

Posted by: Nikta at February 13, 2005 09:48 AM

You protest too much. Obviously Bush was stating his belief that the fund will be zapped by demographics reducing the payments in to the plan to the point there is no surplus for "investment" into the "special" T bills. At that point they simply won't exist.

Posted by: PPJ (aka Jim) at February 13, 2005 12:21 PM

PPJ:

I don't think so. If the special Treasury bonds are honored, then Bush's statement that there is "no trust" will be proved to be false.

After all, if the special Treasury bonds are honored, then, in fact, there is a "a pile of money being accumulated."

If Mr. Bush does not intend for those debts to be honored, why is he continuing to buy worthless paper with Social Security tax proceeds?

Posted by: dwight Meredith at February 13, 2005 01:56 PM