WASHINGTON — President George W. Bush’s Social Security road show ran off the road last week and he can’t seem to get it back on track. The uproar was unleashed April 5, when he cast doubts on the creditworthiness of the federal government.
Posing beside a file cabinet at the Office of Public Debt Accounting in Parkersburg, W.Va., and holding a U.S. Treasury bond as a prop, Bush intoned, “A lot of people in America think there is a [Social Security] trust … But that’s not the way it works. There is no trust ‘fund’ — just IOUs that I saw firsthand … The retirement security for future generations is sitting in a filing cabinet.” He then lapsed into his pitch for private retirement accounts, “assets that you can control … that the government can’t take away.”
A New York Times editorial blasted the stunt as “insulting and irresponsible.” House Minority Leader Nancy Pelosi (D-Calif.) and Senate Minority Leader Harry Reid (D-Nev.) wrote to Bush, “For a president to even suggest that the federal government might for the first time default on a security backed by the full faith and credit of the United States … misleads American workers about the health of the Social Security program.”
AFL-CIO President John Sweeney called Bush’s photo op a “campaign stunt — and a cynical and irresponsible one at that.” He pointed out that workers have paid more into Social Security than needed to pay benefits — $67 billion more in 2004 alone — to partially pre-fund future benefits by accumulating surplus assets in U.S. Treasury bonds.
“To suggest now that workers have been had and that there is no trust fund to pay the benefits they paid for is an extraordinary betrayal,” Sweeney said. Pension fund managers, workers paying into 401(k) accounts, foreign investors and central banks “must have been surprised to learn from President Bush that the trillions of dollars in U.S. Treasury securities they own are not ‘real assets.’”
Max Sawicky, a researcher at the Washington-based Economic Policy Institute who has written extensively on Social Security, told the World, “By law, those pieces of paper that Bush describes as worthless IOUs must be redeemed. If Bush thinks Treasury bonds are worthless, then he is committing fraud because he has added many billions to the federal bond debt. And he is proposing to add another trillion.”