1.04.2005

From our "We Love Josh Marshall" file:
Josh lays it all out on Social Security "reform" over at TalkingPointsMemo.com (01.02)
Yes, a little late with this but we're easing into the new year. Josh puts it all in perspective though...

The United States has a bit over $7 trillion in accumulated national debt. You can say that's been built up over the history of the country. But overwhelmingly it was borrowed over what happens to be the span of my lifetime -- the last thirty-five years –– and especially over the last twenty-five years.

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.

So where'd we borrow the money?

This is from memory, so I may have the numbers a bit off. But 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).

Got it? Good, 'cuz here's the kicker:
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.

[snip]

So why does the president figure he can get away without making good on the debt to the folks who pay Social Security taxes, who are overwhelmingly low and middle–income wage earners (since no one pays Social Security tax on investment income or wage and salary income over about $85,000 a year)?

Isn't it obvious? Because he thinks they're an easy mark.

If anything, the fact that a sizeable portion of our huge national debt is owed (in the aggregate) to ourselves would seem to be a good thing since it gives us in extremis at least some flexibility on repayment. But to the president this is a reason to abolish Social Security so the money doesn't have to be paid back at all.

As always, read and decide for yourself, but it seems fairly obvious to us too.

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