Re: END OF DICSSION DJF Dean Baker nonsense about Defaulting on the National Debt

[David Farber <dave () farber net>]

Begin forwarded message:

From: Andrew Burnette <acb () acb net>
Date: January 9, 2009 7:04:00 PM EST
To: dave () farber net
Subject: Re: [IP] Re:   Dean Baker nonsense about Defaulting on the  
National Debt

Dave,

while I 100% agree that calling it a default on debt is "alarmist" at  
the kinder end of the scale, let's call it what it is.

Congress for decades has been hiding horrendous budget deficits of the  
federal government by silently borrowing the entire social security  
surplus. It's nothing short of nauseating. Most year of the past 3  
decades have had actual operating deficits 50-100% above that which  
get printed in the paper.

Sure, the OMB and so on put the numbers in the fine print, but it is  
akin to the hidden "other 7%" SS/payroll tax regular employees never  
see (paid by employers) on their paystubs. (My opinion is that sheer  
outrage among the working middle class would flip washington up end a  
few times if that entire tax amount were shown on paychecks)

Here's where it gets ugly. When those notes from the SS trust fund  
come due, the federal operational budget is required to pay back those  
debts. So the question becomes "with what, more debt?" and from where  
might that debt be financed.

Default? Perhaps that's just a misnomer. But I know if I stop paying  
my credit cards to pay my mortgage, someone will claim I'm in default.

Should the federal budget be any different?

Best regards,
andy burnette





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