OPINION
LAWRENCE JOURNAL-WORLD ● LJWorld.com ● Saturday, March 19, 2011
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WHERE TO WRITE
IOUs don’t boost Social Security solvency
WASHINGTON — Last week, President Obama’s budget chief, Jack Lew, took to his White House blog to repeat his claim that the Social Security trust President Barack Obama fund is solvent through 2037. And to White House, Washington, chide me for suggesting otherwise. I D.C. 20500; had argued in my last column that the (202) 456-1111 trust fund is empty, indeed fictional. Online comments: If Lew’s claim were just wrong, that www.whitehouse.gov/contact/ would be one thing. But it provides the intellectual justification for precisely U.S. Sen. Jerry Moran (R) the kind of debt denial and entitleRussell Senate Office ment complacency that his boss is Building, Courtyard 4 now engaged in. Therefore, once Washington, D.C. 20510; more unto the breach. (202) 224-6521; Website: Lew acknowledges that the Social www.moran.senate.gov Security surpluses of the last decades U.S. Sen. Pat Roberts (R) were siphoned off to the Treasury 109 Hart Senate Office Department and spent. He also agrees Building that Treasury then deposited correWashington, D.C. 20510; sponding IOUs — called “special issue” (202) 224-4774; Website: bonds — in the Social Security trust www.roberts.senate.gov fund. These have real value, claims Lew. After all, “these Treasury bonds are U.S. Rep. Tim Huelskamp (Rbacked by the full faith and credit of the 1st District) U.S. government in the same way that 126 Cannon House Office all other U.S. Treasury bonds are.” Building Really? If these trust fund bonds Washington, D.C. 20515; represent anything real, why is it that (202) 225-2715; Website: in calculating national indebtedness www.huelskamp.house.gov they are not even included? We measure national solvency by debt/GDP U.S. Rep. Lynn Jenkins (Rratio. As calculated by everyone from 2nd District) the OMB to the CIA, from the Simp1122 Longworth House Office son-Bowles to the Domenici-Rivlin Building commissions, the debt/GDP ratio Washington, D.C. 20515; counts only publicly held debt. This (202) 225-6601; Website: means bonds held by China, Saudi www.lynnjenkins.house.gov
Federal
Charles Krauthammer letters@charleskrauthammer.com
If these trust fund bonds “represent anything real, why is it that in calculating national indebtedness they are not even included?”
Arabia, you and me. The debt ratio completely ignores the kind of intragovernmental bonds that Lew insists are the equivalent of publicly held bonds. Why? Because the intragovernmental bond is nothing more than a bookkeeping device that records how much one part of the U.S. government (Treasury) owes another part of the same government (the Social Security Administration). In judging the creditworthiness of the United States, the world doesn’t care what the left hand owes the right. It’s all one entity. It cares only what that one entity owes the world. That’s why publicly held bonds are
so radically different from intragovernmental bonds. If we default on Chinese-held debt, decades of AAA creditworthiness is destroyed, the world stops lending to us, the dollar collapses, the economy goes into a spiral and we become Argentina. That’s why such a default is inconceivable. On the other hand, what would happen to financial markets if the Treasury stopped honoring the “special issue” bonds in the Social Security trust fund? A lot of angry grumbling at home for sure. But externally? Nothing. This “default” would simply be the Treasury telling the Social Security Administration that henceforth it would have to fend for itself in covering its annual shortfall. How? By means-testing (cutting the benefits to the rich), changing the inflation formula, raising the retirement age and, if necessary, hiking the cap on income subject to the payroll tax. You can plug in whatever combination of numbers you prefer for the definition of “rich,” for the slope of the sliding scale of benefit reduction, for the rate of the retirement-age increase, or for any other variable. Whatever the formula, we will ironically have been forced to adopt the very reforms needed to keep Social Security in balance for years to come — the kind President Obama’s own deficit commission recommended. Arguably, that would add to U.S. creditworthiness by finally demonstrating
U.S. Rep. Kevin Yoder (R-3rd District) 214 Cannon House Office Building Washington, D.C. 20515; (202) 225-2865; Website: www.yoder.house.gov
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Several students had set up a tent on Kansas University’s West Campus to YEARS protest KU EndowAGO ment Association’s IN 1986 investments in corporations that did business in South Africa. The group had pledged to camp at the site until the association took decisive action on the issue.
State
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Secretary of State Kris Kobach (R) 1st Floor, 120 S.W. 10th Ave., Topeka 66612 (785) 296-4564; sos@sos.ks.gov
Insurance Commissioner Sandy Praeger (R) 420 S.W. Ninth St., Topeka 66612 (785) 296-3071 or (800) 432-2484 commissioner@ksinsurance.org
State Board of Education Janet Waugh, (D-District 1) 916 S. 57th Terrace, Kansas City, KS 66106 (913) 287-5165; JWaugh1052@aol.com Carolyn Wims-Campbell, (DDistrict 4) 3824 SE Illinois Ave., Topeka 66609 (785) 266-3798; campbell4kansasboe@verizon.net
Kansas Board of Regents 1000 S.W. Jackson St., Suite 520, Topeka, KS 66612; (785) 296-3421 www.kansasregents.org Gary Sherrer, Overland Park, chairman Jarold “Jerry” Boettcher, Beloit Christine Downey-Schmidt, Inman Mildred Edwards, Wichita Tim Emert, Independence Richard Hedges, Fort Scott Dan Lykins, Topeka Ed McKechnie, Arcadia Janie Perkins, Garden City Andy Tompkins, president and CEO
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From the Lawrence Daily Journal-World for March 19, 1911: YEARS “Lawrence was AGO the terminus of a IN 1911 motorcycle run from Topeka yesterday. Nine members of the Topeka Club made the run to Lawrence, starting in the morning and returning late in the afternoon. One of the interesting Kansas may be events of the run was the hill known more as a climbing contest the club memwheat state than a bers held on the Mount Oread syrup state, but incline. Most of the pop-pops took YEARS Lawrence resident the steep hill like veterans. While AGO Mr. A. B. Commons the attempts to make a record up IN 1971 was recalling his hill were being held, a big crowd of long-ago boyhood students from the district gathin eastern Illinois as he tapped the ered to watch the sport.” sugar maple trees in the yard of — Compiled by Sarah St. John his home at 1706 Learnard. When he started boiling down the sap on his kitchen stove. Commons’ Read more Old Home Town at operation had yielded three pints LJWorld.com/news/lawrence/ of maple syrup so far, he said. history/old_home_town.
Gov. Sam Brownback (R) Suite 212-S, State Capitol, Topeka 66612 (785) 296-3232 or (877) 579-6757 governor@state.ks.us
Treasurer Ron Estes (R) 900 S.W. Jackson St., Suite 201, Topeka 66612 (785) 296-3171; ron@treasurer.ks.gov
—Charles Krauthammer is a columnist for Washington Post Writers Group.
OLD HOME TOWN
U.S. Rep. Mike Pompeo (R4th District) 107 Cannon House Office Building Washington, D.C. 20515; (202) 225-6216; Website: www.pompeo.house.gov
Attorney General Derek Schmidt (R) 2nd Floor, 120 S.W. 10th Ave., Topeka 66612 (785) 296-2215; general @ksag.org
to the world our seriousness about bringing our unsustainable pension liabilities under control. Invoking the “full faith and credit” mantra for those IOUs in the trust fund is empty bluster. It does not change the fact that, as the OMB itself acknowledged, those IOUs “do not consist of real economic assets that can be drawn down in the future to fund benefits.” Yet Lew continues to insist that these “special issue” trinkets will pay off seniors for the next 26 years. Nonsense. That money is gone with the wind. Those trust fund trinkets are nothing more than a record of past borrowings. They say nothing about the future. Consider: If Treasury had borrowed twice as much from Social Security in the past — producing twice as many IOUs sitting in the lockbox — would this mean the trust fund is today twice as strong? Solvent for 50-some years instead of just 26? Of course not. The trust fund “balances” are mere historical record-keeping. As the OMB itself admitted, future payouts will have to be met by future taxes and future borrowings — or by Social Security reform that, by reducing benefits, makes such taxing and borrowing unnecessary. There is no third alternative. There is no free lunch. And there is nothing in the lockbox.
PUBLIC FORUM
Conflict of interest? To the editor: As a concerned citizen, I am worried that the city's new Solid Waste Task Force may be starting off on the wrong foot, with the appointment of a representative from N.R. Hamm Quarry Inc., the sole contract provider of solid waste disposal to the city of Lawrence. In late 2010, Hamm Inc. raised the city’s tipping fee by 30 percent, perhaps in response to the city having reduced its waste generation through recycling. In 2011, the Hamm company is slated to receive nearly $3 million in landfill tipping fees from the city. How can the mayor and the City Commission justify appointing a representative from Hamm to the Solid Waste Task Force when the company appears to have an obvious conflict of interest? The Solid Waste Task Force is an important policy-setting board established to study the future of solid waste services for our community. As such, the task force is obligated to serve the needs and interests of the citizens of the city of Lawrence. This appointment creates an unfortunate appearance of bias and allows an outside entity with vested financial interest to help drive and frame the pending discussion and influence the recommendations that arise. Will this
appointment endanger the legitimacy of the process and findings of the task force? I expressed my misgivings to the city manager and the commissioners prior to this appointment, to no avail. I encourage the citizenry to monitor the proceedings of the Solid Waste Task Force, and actively participate when the opportunity arises. Laura Routh, Lawrence
Rural, urban To the editor: Lawrence’s school task force recommends closing Wakarusa Valley and eventually consolidating several urban schools. Of all schools discussed, WV requires the least structural investment, and purported savings are a small fraction of the budget shortfall. Because WV kids are spread across more than 51 ,000 acres, transporting them to other schools will require more than two hours each day on a bus — a steep price for a 5-year-old. Least quantifiable but real, the change for a child switching from a rural to an urban school is arguably greater than moving from one urban school to another. Certainly no two urban elementary schools are alike, but schools separated by blocks are more similar in feel than an urban vs. a rural school.
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can, of itself, guarantee the peace beyond its own borders? Also that America’s interests are not the same as those of Israel in the Middle East. That our hopes for peace in Afghanistan can never be realized by pursuing an unwinnable war against its 27 million with a mere 50,000 troops compared to the millions who have tried it before and failed. Nor can we persuade 1.4 billion Muslims to convert to our predominately Christian values. It is time to cut our losses and bring back home our troops from these stupid, unwinnable wars. We need not wait for death before judging those with the power to do this that have pursued this policy of sending more and more of our military into this bottomless pit. As citizens we must share the responsibility for these careless, foolish acts of our elected leaders. History will hold us responsible as surely as it has held responsible the generations of Germans for the First and Second World Wars. Mr. Bush cost us our traditional high moral status from which to preach to others. Now we must act to regain it. Surely Vietnam must have taught us something? Certainly it taught us the limits To the editor: of our power. Also it taught us that in What must we do as citizens to the democracy of the dead all persons make our leaders realize that the time are equal. has come in this world of 7 billionplus human beings that no nation of Everett Hickam, 300 million no matter how powerful Lawrence
Downtown school advocates promote task force recommendations without mentioning any of these issues, the increased taxes required to fund their new schools or the greater savings realized if their schools were closed. The disproportionate suffering of WV kids, who will have their peer groups split up and be bused for hours to urban environments their parents pointedly chose to avoid — all to save a mere fraction of needed funds — is not acknowledged. Once-unified cries of “don’t close our schools” have degenerated into “save my own school, even if closing others makes no fiscal sense and imposes insanely long bus rides on other people's kids.” Like eminent domain cases, WV families don’t have a choice. Unlike most eminent domain cases, this scenario results in no greater good. Why are we discussing one school closure in isolation from the other 87 percent of our budget woes? Sharon Billings, Lawrence
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