Here's a point I'm surprised no one has made more of.
As you know, the president says the Treasury notes in the Social Security are 'worthless IOUs'. And we've explained, probably at too much length at this point, why that is both factually incorrect and morally wrong, in as much as stealing other people's money is ever wrong.
The only sense in which the president's claim has any meaning at all is that while those Treasury notes are assets in the hands of the Social Security Trust Fund (payroll tax money collected overwhelmingly from middle income earners) they are also claims against future money out of general revenues (money collected disproportionately from upper-income earners).
That doesn't make them unique: all the debt we've been running up over the last three decades is in Treasury notes that will have to be paid back, with interest, out of general revenue. The ones owned by the central banks in Asia, the ones that President Bush has most of his personal wealth tied up in, all of them.
It's always seemed to me that it's a good thing, not a bad thing, that some of that money at least can go to people's Social Security checks.
That's not a reason to get rid of Social Security, as the president wants. It's a reason to stop running chronic budget deficits.
In any case, the point the president is trying to make is that those bonds built up in the Trust Fund will have to be paid in coming years out of general revenue, which means for the most part out of income taxes.
But consider this.
On what basis are we endlessly told that President Bush's private accounts system would be a secure retirement security vehicle for Americans? Because he says that a substantial proportion of the accounts would be made up of US government bonds, the safest investment in the world.
So what's the difference exactly?
Private accounts advocates would say that there's all the difference in the world since people would have a personal property right to those assets rather than what they have now. I'm not so sure that's really true, as I'll try to explain later. But even if it is, that doesn't make any difference in terms of the fact that they are obligations against general revenue from the US Treasury.
Under either scenario, a substantial portion of the US government's retirement security program will be paid for by general revenue funds. And you can come up with the same scare-quotes about this or that number of hundreds of billions of dollars being needed and whether it's going to come out of budget cuts or new taxes. As far as I can see, there's no difference.
So perhaps reporters should ask the president what will make those bonds any less worthless when they start funding his private accounts plan.
Now, one separate point. Private accounts advocates, as I said, will argue that a big difference is that you'll own these assets. But will you? As I understand the president's program, you'll have a choice of investing in a handful of separate funds, which will vary by risk -- some weighted more to stocks, others weighted more to bonds. Whatever theoretical ownership right you might have, it sounds to me like this just means that instead of having one big Trust Fund -- with all those worthless IOUs -- President Bush is going to set us up with maybe 4 or 5 mini-Trust Funds, each with their cabinet drawer of worthless IOUs. It'll be sorta like the baby-bells after the break up of ATT.
As near as I can figure it, the only way to get around this problem is to have the private accounts invested entirely in stocks. Or, rather, to have none of their funds invested in US government bonds.
Of course, if you do that, the risk level goes through the roof.