New York Times
Published: April 7, 2005
Imagine this: On his next trip to Japan, President Bush visits the vault at the Bank of Japan, where that country's $712 billion in United States government bonds is stored. There, as the cameras roll, he announces that the bonds, backed by the full faith and credit of the United States, are, in fact, worthless i.o.u.'s. He does the same thing when he visits China and so on around the world, until he has personally repudiated the entire $2 trillion of United States debt held by foreigners.
Mr. Bush rehearsed just that act on Tuesday, when he visited the office of the federal Bureau of Public Debt in Parkersburg, W.Va. He posed next to a file cabinet that holds the $1.7 trillion in Treasury securities that make up the Social Security trust fund. He tossed off a comment to the effect that the bonds were not "real assets." Later, in a speech at a nearby university, he said: "There is no trust fund. Just i.o.u.'s that I saw firsthand."
Social Security takes in more money than it needs to pay current beneficiaries, and the excess is invested in the Treasury securities that Mr. Bush was discussing. They carry the same legal and political obligations as all other forms of Treasury debt, every penny of which has always been paid in full and on time.
In his speech, Mr. Bush went on to acknowledge that future generations would have to make good on the debt. But the intended meaning of the photo-op was clear. In the hope of persuading people to privatize Social Security - a move that would only add to the growing debt burden for future generations - Mr. Bush wants Americans to believe that the trust fund is a joke. But if the trust fund is a joke, so is the full faith and credit of the United States.
Fortunately, the governments, institutions and individuals who hold United States debt can tell a publicity stunt from a policy statement. Still, casting aspersions on a basic obligation of the United States government is insulting and irresponsible.