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January 02, 2005

A New Unit of Shrillness

Boy, is Josh Micah Marshall shrill. The NIST standard unit of shrillness is no longer the Chait, it is the Marshall:

Talking Points Memo: by Joshua Micah Marshall: January 02, 2005 - January 08, 2005 Archives: After 1980 we started borrowing money big-time to finance our deficits -- in large part because of tax cuts on high-income earners. However you want to slice it, we started spending substantially more than we were taking in in tax revenue.... I believe about $4 trillion of that debt was borrowed on the open market -- individual Americans have them in their investment portfolios, or pension funds hold them, or the Chinese, Japanese and the Saudis and others have them in bonds. But about $3 trillion of those dollars we needed to fund the 1980s and 1990s deficits we managed to borrow closer to home. We borrowed it from the Social Security (and a few other government) trust fund(s).

Almost the entirety of President Bush's Social Security phase-out plan comes down to a simple proposition: finding out how not to pay it back.

Now, admittedly, this is an approach that the president is rather familiar with from his own business career at various failed energy companies. But it is, in so many words, a straight up con -- one of vast scale, and one which virtually no one in the media ever frames in just these terms....

Posted by DeLong at January 2, 2005 12:02 PM

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I don't find his remarks shrill at all. It is a con. If this same borrowing had been done by actually auctioning off bonds, then there would be no question that the U.S. government would be obligated to honor its commitment.

Posted by: Andrew Boucher at January 2, 2005 12:08 PM

Josh misses a not-so-subtle difference.

Almost the entirety of Bush's plan consists of finding ways for his cronies to profit from the re-investment of public money.

Posted by: melior at January 2, 2005 12:13 PM

The most complete analysis I've seen of defaulting on the SS bonds (which I assume is tantamount to not paying them back) is by Dean Baker (click on my name for link), "Defaulting On The Social Security Trust Fund Bonds: Winners And Losers," July 23, 2001.

Posted by: liberal at January 2, 2005 01:25 PM

Note well that Krugman has also written on the "con."

Furthermore, one of the most morally despicable characters in this entire issue is Alan Greenspan.

Posted by: liberal at January 2, 2005 01:31 PM

Thanks to liberal for the very important article on defaulting on US bonds. Too many pro-privatization partisans are succeeding in hoodwinking the public into believing that the special T-bonds held by the SS with its surplus over the past twenty years are "worthless" pieces of paper.

Posted by: Ralph at January 2, 2005 02:45 PM

They are worthless if the government defaults. And if you try to spend the gold in Fort Knox the price of gold will rapidly fall too.

Posted by: Big Al at January 2, 2005 05:56 PM


Say thank-you to Clinton for keeping the guy who proposed to rob the nation's retirees as the central banker. I feel your pain.

Posted by: a at January 3, 2005 01:32 AM

And Clinton would have been able to nominate and pass through Congress whom to run the Reserve Board?

Posted by: linnen at January 3, 2005 09:48 AM

linnen: And Clinton would have been able to nominate and pass through Congress whom to run the Reserve Board?

And did he ever try? He had Democratic Congress in 1992-1994 and split Congress afterwards. He did not succeed in pushing anything significant other than pro-business welfare reform and NAFTA - Republican agenda. And did it help Democrats to keep power? Ask Tom Daschle.

Posted by: a at January 3, 2005 11:46 AM

The only time Congress has been split since 1994 has been between Jefford's defection in 2001 and the inauguration of the current crew in 2003.

Posted by: Matt Weiner at January 3, 2005 09:00 PM

http://www.juancole.com/ on the interim president of Iraq: One of his wives is Nasrin Barwari, a Kurdish cabinet minister.

One of his wives? Here people go to jail for that. Anybody remind me just what society is US trying to establish in Iraq? Khalifate? And that is better than Saddam how?

Posted by: a at January 3, 2005 11:00 PM

Oops. Apologies. My previous post belongs in the next thread "Counterinsurgency in Iraq Is Not Going Well". Sorry.

Posted by: a at January 3, 2005 11:03 PM

From a comment in another thread, the money was borrowed from income below the social security threshold. So we need an income tax surcharge for income *above* the social security threshold, kicking in around 2017 or so. It would be calibrated to be a fair payback for all the money borrowed. We could have great (and educational) fun arguing about what's "fair".

Posted by: Bill Arnold at January 4, 2005 02:13 PM

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