Saturday, February 19, 2005

Killing the Trust Fund Pookah


Charles Krauthammer (Town Hall)

Amazing, isn't it, the number of conservatives in the media who don't believe in the full faith and credit of the United States government. I view it as economic treason. As usual lately, the economically treasonous remarks come out when the conserverati discuss Social Security. Charles Krauthammer is guilty of it too, but the former psychiatrist takes a distinctly shrink-like approach: Americans are all affably daft and the Social Security Trust Fund is a multi-trillion dollar pookah.
2042. I do not know if the president's Social Security reform will pass, but if it does not, its demise will be traced to that point in the president's State of the Union address when he warned that the system would go bankrupt in 2042. It was a disastrous moment.
Why? Paraphrasing Dr. Krauthammer here, Americans are too cognitively impaired to think that far ahead. I wonder: Maybe the president should have included a brief mnemonic ditty in his State of the Union address so that we neuro-damaged citizens could stay focused on the date. Perhaps something like that grade-school "Columbus sailed the ocean blue" rhyme:
In 2042, we'll all be fucked -- you know it's true.
See, you're not going to forget that date now, are you?

And not only are we Americans incapable of thinking in the long term, we haven't fully adjusted to the reality of years that begin with a "2." I kid you not.


Moreover, the new millennium was always a science-fiction idea, and now that we are there, years beginning with a ``2'' still seem fictional. Even 2011, the first boomer retirement year, has a Stanley Kubrick feel; 2042 lies somewhere in the Matrix.
Well, personally, I always had the feeling that my retirement was going to be more low-budget Ed Woodian than Kubrickian, but overall that's still better than Tarantinoesque.

Now that he has astutely diagnosed our mass neurologic and chronologic deficiencies, Krauthammer moves on to our shared mass delusion -- la folie des masses: We believe that the Social Security Trust Fund actually exists!
If 2042 were an actuarially significant date, all of this could be forgiven. The president would simply have to work extra hard on getting us to imagine it. But pointing to a date that will instantly lose 90 percent of the audience is doubly crazy when that date is meaningless. 2042 is the fictional date for the fictional bankruptcy of a fictional trust fund.
There's only one proper response to that terminal diagnosis: Go on a spending spree, put everything on your credit cards, and hope you (or the economy) dies before the bills come due. (By the way, did Krauthammer imply that Bush did something doubly crazy? Hmm.)
The Social Security system has no trust fund. No lock box. When you pay your payroll tax every year, the money is not converted into gold bars and shipped to some desert island, ready for retrieval when you turn 65. The system is pay-as-you-go…. These pieces of paper [Treasury IOUs] might be useful for rolling cigars…. To bring the silliness full circle, the president himself has since admitted that there really is no trust fund.
Silliness? What an exceedingly odd word choice. Rolling cigars? Can't convince me that Krauthammer isn't a strict Freudian. Yet, his talk of gold bars got me thinking. If Krauthammer is as smart as he thinks he is -- and obviously he thinks he's very, very smart -- has he already started to convert dollars into euros and other currencies? Is he stashing gold ingots in a Swiss bank?

So I e-mailed Krauthammer and asked him. I also asked him if he thought our government's imaginary default on imaginary bonds in the imaginary Social Security Trust Fund might trigger a very real worldwide economic panic. So far, there's been no response, but I understand -- given the high volume of e-mails Krauthammer must receive, especially those seeking personal investment advice.

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