Bush questions worth of Social Security trust fund
"You see these here pieces of paper? The ones that say 'full faith and credit' on 'em?
"Well, we ain't gonna pay 'em. We just ain't gonna.
"We done spent the money you lent to us, and now we don't have it to give it back to you, see? So we ain't gonna pay 'em."
I'm just starting to wake up to the magnitude of what Bush is doing to the Trust Fund. It dwarfs Enron, it's the worst financial scandal in history.
Here's what happened (pardon me if you've heard it before, but it's important enough to repeat):
- Taxpayers paid over a trillion dollars in extra taxes to build up a trust fund. (The fund had $1.53 trillion in invested assets in December 2003.)
- The taxpayers' fund money was invested by loaning it to the rest of the government, in exchange for Treasury securities (i.e., the fund purchased Treasury securities). Presumably this was because Treasury securities are the safest investments there are, because they are backed by the full faith and credit of the government's promise to repay the money loaned by the bondholder, with interest.
- Now, George W. Bush, for our sins the President of the United States, says the securities are worthless and will not be honored. They just won't be.
Bush says the money "is gone."
Of course, the money borrowed by the goverment was spent, but the Fund still holds the
securities, which are legal claims on the Treasury -- a legally enforceable promise to repay. The bonds are still there,
as Bush saw with his own eyes.
Do you think that argument would work with your bank? "I spent the money you lent me, I can't repay you, sorry."
How can he possibly get away with this? Where are the Democrats???/
And anyway,how is this all going to go down, procedurally?
Is Congress going to have to enact legislation repudiating the bonds? The "Screw You Taxpayer Act of 2005?" Note to self: Stock up on microwave popcorn for that one.
What if there is no repudiation, and a bond is presented to the Treasury for payment? What does Bush think is going to happen then?
And what recourse does the bondowner (i.e. the Trust Fund) have if the government defaults? Is there some entity or agency that could sue the Treasury for performance on the bonds?
There will be litigation over this, that is absolutely certain.
Bush is even more nuts than I thought he was. He really and truely doesn't understand the consequences of what he's doing.