SS Privatizers Say That The Trust Fund Is Meaningless IOU's

[Strelnikov_]

I just do not see how they can honestly advance this argument.

If the oligarchy reneges on the SS trust fund, it will mean that the wage earners of the U.S. have funded the tax cuts for the rich over the last 30 years.


Stopping the Bum's Rush
By PAUL KRUGMAN
Published: January 4, 2005

http://www.nytimes.com/2005/01/04/opinion/04krugman.html?hp

. . .

"So where's the imminent crisis? Privatizers say the trust fund doesn't count because it's invested in U.S. government bonds, which are "meaningless i.o.u.'s." Readers who want a long-form debunking of this sophistry can read my recent article in the online journal The Economists' Voice (www.bepress.com/ev)"

"The short version is that the bonds in the Social Security trust fund are obligations of the federal government's general fund, the budget outside Social Security. They have the same status as U.S. bonds owned by Japanese pension funds and the government of China. The general fund is legally obliged to pay the interest and principal on those bonds, and Social Security is legally obliged to pay full benefits as long as there is money in the trust fund."

"That is, we can't have a Social Security crisis without a general fiscal crisis - unless Congress declares that debts to foreign bondholders must be honored, but that promises to older Americans, who have spent most of their working lives paying extra payroll taxes to build up the trust fund, don't count."

"Politically, that seems far-fetched. A general fiscal crisis, on the other hand, is a real possibility - but not because of Social Security. In fact, the Bush administration's scaremongering over Social Security is in large part an effort to distract the public from the real fiscal danger.

. . .