If Jacob Lew, director of the White House’s Office of Management and Budget, believes what he wrote, the nation is in even worse trouble than I thought (“Social Security isn’t the problem,” Opposing view, Retirement debate, Feb. 22).
He tells us Social Security’s so-called trust fund takes in payroll taxes and holds U.S. Treasury bonds “backed with the full faith and credit of the U.S. government — and are held in reserve for when revenue collected is not enough to pay the benefits due. We have just as much obligation to pay back those bonds with interest as we do to any other bondholders.” And that’s the problem. The federal government is both the creditor and the debtor. It’s as if the government has written IOUs to itself. To pay benefits, the government will have to cash in the bonds. To pay the interest on the bonds, it will have to raise taxes.
Moving money from the left pocket to the right pocket does not increase our wealth, nor does it increase the solvency of the federal government.