Or simply a collection of the most willfully ignorant people on Earth? This is the question ‘Puter asks himself almost every time he reads a New York Times editorial.
Here’s today’s whopper, pre-spinning Republican concerns over our bankrupt government entitlement programs:
A lot of attention will be paid to the finding in the Social Security report that payouts will exceed revenues in 2010 and 2011, as high unemployment drives down payroll taxes. That doesn’t endanger benefits, because any shortfall can be covered by the trust fund.
Let ‘Puter enlighten you. Social Security has always been a gigantic Ponzi scheme. Our Congress spends every dime collected under the OASDI tax each year, replacing the funds with Treasury bonds. That’s the “trust fund” the editorial board assures you is sufficient to cover Social Security’s current and future obligations. It’s the equivalent of funding your 401k with IOUs and pretending you’re well set for retirement.
“What’s the problem, ‘Puter?”, you may ask. “All Social Security has to do is cash in the bonds, right? The government never defaults on its debts.”
And that’s exactly where the problems start. Cashing in the bonds requires the government to get the money from somewhere. There’s no magical Al Gore Social Security lockbox sitting in a desk drawer in Washington holding years of accumulated OASDI tax revenue. In order to honor the bonds Social Security will cash in, the government will either have to raise taxes, print money or borrow funds, most likely the latter, in the form of additional Treasury bond issues. Higher taxes are political suicide and inflating away debt would crater the bond markets. That leaves borrowing.
Our biggest lenders (bond purchasers) right now are foreign governments, who are rightly becoming concerned about America’s ability to repay its debts. This lack of confidence will lead inexorably to either (1) higher borrowing costs in the form of higher interest rates or (2) failure of bond issues (i.e., no purchasers) altogether.
Government may pull this off in the short term, but as many Americans can attest, rolling debt from one credit card to another in order to maintain profligate spending is a one-way ticket to bankruptcy.