Washington Post columnist Allan Sloan called for defaulting on the U.S. national debt, or at least a portion of it, in his weekly column today. Mr. Sloan pointed out that the Social Security trustees project that the program will begin drawing on the government bonds in its trust fund in just over a decade. He said that repaying the bonds in the trust fund will be a burden to the government, and that his children, as future taxpayers, shouldn't have to bear this burden. Mr. Sloan probably would object to describing his column as a call for default on the national debt, but this in fact exactly what it is. In the column, he implicitly derides the legitimacy of the bonds held by Social Security by calling them IOUs. Of course all bonds are IOUs, but they are never described this way in normal discussions. Under the law, the bonds held by the Social Security trust fund are legal obligations of the federal government. Social Security bought these bonds with the excess Social Security taxes paid by more than 150 million workers over the last two decades. (Taxes were deliberately raised to exceed benefits in order to build up the trust fund.) The trust fund current holds more than $1.9 trillion in bonds, approximately $12,000 for every active worker. Workers have every right to expect that the money they paid into the trust fund in Social Security taxes will be repaid in benefits that are financed out of general revenue. (This is not in one pocket out the other, general revenue comes primarily from the progressive individual and corporate income taxes, while Social Security taxes are highly regressive.) Mr. Sloan's kids may not want to pay their taxes (most people would prefer not to pay taxes, if they can avoid it), but as a moral matter, there is no greater justification for defaulting on the debt to Social Security than any other portion of the government debt. If a future Congress debates default on the bonds held by the Social Security trust fund then it would also be reasonable for it debate default on all other government bonds, including those held by banks, corporations, and wealthy individuals. Realistically, if we fix our national health care system, then future budgets should not impose any extraordinary burdens on future generations of taxpayers. But, if default ever rises as an issue on the national agenda, then we should be talking about making all debt holders share the burden of the default, not just the debt holders that Mr. Sloan doesn't like.
--Dean Baker
