Comments on economics, mystery fiction, drama, and art.

Tuesday, April 05, 2005

What Is A Trust Fund?

Speaking today in Parkersburg, West Virginia, President Bush said: “A lot of people in America think there is a trust — that we take your money in payroll taxes and then we hold it for you and then when you retire, we give it back to you. But that’s not the way it works. There is no trust ‘fund’ — just IOUs that I saw firsthand”

Suppose I had inherited a trust fund from my great-grandfather, and suppose that the trust fund were composed entirely of U.S. Treasury Bonds--IOUs from the Federal Government to the "owner" of the trust fund. In what sense can it be said that there is no trust fund? Only in the sense that the U.S. Treasury plans to default on its promise to pay me the interest and principal represented by those bonds.

So, when the President of the United States says, "There is no trust fund," what he's really saying is that it's his belief or plan or intention that the U.S. Treasury will default on those bonds. If that's his intention, and if he carries that intention out (but fortunately for the rest of us, he won't be president by then), I believe that would be an impeachable offense. Hell, I'm ready to believe that planning to default is an impeachable offense.

I repeat myself. Someone in Congress should introduce a "sense of the Congress" resolution stating that U.S. Treasury bonds--whether in the Social Security Trust Fund or not, carry the full faith and credit of the United States Government and demanding that the President pledge that the interest on those bonds will be paid as due and that those bonds will be redeemed as they mature.

Force the privatizers to vote on default. Do it now.


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