With foreign holders of U.S. Treasury notes
covering $2 trillion of our $7 trillion public debt,
and lack of confidence in these treasury notes causing major concerns about the declining dollar,
clearly there was only one way to win back confidence in U.S. Treasury notes:
President Bush sought to dramatize Social Security's solvency problems Tuesday by pointing to government IOUs stored in a file cabinet that are supposed to finance America's future retirement needs.
"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," Bush said in a speech at the University of West Virginia at Parkersburg.
"But that's not the way it works," Bush said. "There is no trust `fund' just IOUs that I saw firsthand," Bush said.
NOTE: "It's just paper!" is not an exact quote.
Earlier, Susan Chapman of the Office of Public Debt Accounting had shown Bush an ivory four-drawer filing cabinet with numeric locks. "This is it," she said.
"This is what exists," Bush said, illustrating his point that the promise of future Social Security benefits are simply stashed in a file.
Chapman opened the second drawer and pulled out a white notebook filled with pseudo Treasury securities pieces of paper that offer physical evidence of $1.7 trillion in treasury bonds that make up the trust fund.
The pieces of paper he saw are not real Treasury securities. In today's computer age, investors no longer get honest-to-goodness Treasury bonds they can hold in their hands. But, by law, the bureau creates paper bonds to put in the file cabinet just in case anybody, like Bush, wants to see the trust fund.
"Imagine," Bush said in his speech. "The retirement security for future generations is sitting in a filing cabinet. It's time to strengthen and modernize Social Security for future generations with growing assets that you can control that you call your own assets that the government can't take away."
