Yes, an AP story tells us that President Bush wants to address the "looming insolvency of Social Security." Since the non-partisan Congressional Budget Office projects that Social Security can pay all future benefits for the next 39 years, with no changes whatsoever, this definitely gives new meaning to the word "looming" or perhaps "insolvency." The real headline for this article should have been that Fed Chairman Ben Bernanke is apparently suggesting that the federal government default on some of the government bonds held by the Social Security trust fund. That would seem to be the implication of his suggestion that we restructure Social Security and presumably not pay the full benefits mandated under current law. Perhaps Mr. Bernanke is following in the foodsteps of President Kirchner in Argentina. Argentina has seen four and a half years of very impressive growth following the partial default on its debt. In fact, Rafael Correa, Ecuador's new president, was sufficiently impressed that he is now considering a similar step. Of course, if Mr. Bernanke wants to go in the direction of defaulting on U.S. government debt, the default should not just be on the government bonds held by the country's workers through the Social Security trust fund. Any default should also hit the bonds held by wealthy people, large corporations, and central banks. Personally, I don't think that default is a good strategy for the United States at this time, but the fact that Mr. Bernanke appears to advocate it is certainly newsworthy.
--Dean Baker