Consistent with the Obama regime’s strategy of trying to convince people that things are well under control and therefore they should re-elect the Dear Leader, Budget Director Jacob Lew is saying that Social Security is sound because it has a “trust fund” full of government bonds.
Don Boudreaux responds sharply in this letter:
Editor, USA Today
Dear Editor:
Budget director Jacob Lew assures us that Social Security is solvent
because the Social Security “trust fund” contains lots of U.S. Treasury
bonds “backed with the full faith and credit of the U.S. government –
and are held in reserve for when revenue collected is not enough to pay
the benefits due” (“Social Security isn’t the problem,” Feb. 22).
Yes, the Social Security “trust fund” is indeed filled with ample
quantities of interest-bearing U.S. treasuries. But the same
organization (Uncle Sam) that is the creditor on these treasuries is
also the debtor on them. Ask: when Uncle Sam cashes in these
treasuries to get funds to pay promised Social Security benefits, who
pays Uncle Sam the principal and interest on these treasuries? Answer:
Uncle Sam – who must, of course, raise taxes on flesh-and-blood people
to get the dollars that he pays to himself so that he can then pay out
promised Social Security benefits.
I.O.U.s written to one’s self are not assets. They are, instead,
pathetic reminders of one’s gross financial irresponsibility.
Bernie Madoff is in jail – rightly so – for duping people with the same
sort of financial flim-flammery that the White House budget director
today peddles in your pages.
Sincerely,
Donald J. Boudreaux
Professor of Economics
George Mason University
