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Tom Jackson is in a 12-step program for recovering sports writers; as part of his rehabilitation, he writes a column centered on the people, politics, passions and peculiarities of Pasco County. Email

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Pasco County News | Breaking News

Obama’s unintended argument for an ‘ownership society’

Posted Jul 25, 2011 by Tom Jackson

Updated Jul 25, 2011 at 05:36 PM

Long before the showdown over America’s sovereign debt, Power Line’s John Hinderaker had had it up to his earlobes with President Obama. But when Obama (wrongly – spectacularly) suggested Social Security payments might be sacrificed to the default demigod, well, let’s let him tell it in his post, “Obama’s Lying Demagoguery About Social Security”:

Of course, it might not be lying demagoguery, it could be ignorance; with Obama that question is always present. Obama says that if August 2 arrives without raising the debt ceiling, Social Security checks may not go out. Law professor Michael McConnell, a former federal appellate judge, explains why Obama is wrong:

The Social Security trust fund holds about $2.4 trillion in U.S. Treasury bonds, which its trustees are legally entitled to redeem whenever Social Security is running a current account deficit. Thus, if we reach the debt ceiling (which I continue to think is a remote prospect, even if less remote than it seemed a week ago), this is what will happen. The Social Security trust fund will go to Treasury and cash in some of its securities, using the proceeds to send checks to recipients. Each dollar of debt that is redeemed will lower the outstanding public debt by a dollar. That enables the Treasury to borrow another dollar, without violating the debt ceiling. The debt ceiling is not a prohibition on borrowing new money; it is a prohibition on increasing the total level of public indebtedness. If Social Security cashes in some of its bonds, the Treasury can borrow that same amount of money from someone else. …

President Obama is therefore wrong when he says that failure to raise the debt ceiling might result in not sending out Social Security checks.

What do you think the chances are that, having been corrected, Obama will retract his contemptible effort to scare the elderly? I know, just kidding.

Of course, the judge overlooks other practical matters. Such as, if the United States goes into “technical” default, who’s going to want to buy the newly issued debt instruments? And if there are buyers, what sort of interest rate are they going to command? Even if the president is guilty of demagoguery, this remains a scenario that ends poorly for seniors in particular, and Americans in general.

And so, as we ponder Obama’s renewed shamelessness – The only adult in the room? Seriously? – we note the elephant on the couch.

Missed in this energetic dispute is a crucial teaching opportunity: Whatever the President and his treasury secretary can or will do (remember how they threatened to withhold eminently fundable paychecks to active military a few months back, precipitating a GOP fold on current-year budget cuts), access to Social Security payments would not be an issue if – ages ago – Washington had converted SS to some failsafe hybrid that stressed ... wait for it ... private accounts.

Yes, that’s right. He said it.

Panicky seniors and present-form Social Security activists threatening to take the nation’s capital with pitchforks if the program is trimmed or amended and not “strengthened” (tax all income, they helpfully suggest, turning Social Security, at last, into a welfare program) must, at last, rely on the generous nature of federal lawmakers.

Those annual notices you get from the Social Security Administration projecting your “benefit”? It turns out those are for entertainment purposes only. Threatened recipients are learning the hard way their accounts are theirs in name only. Pity.

Worse, as long as the prevailing arrangement persists, Social Security will continue to perform two connected functions, both of them ruinous. As ever, an unsupportable number of Americans will lean on the promise of a government stipend (those fictional annual notices) as an excuse to underfund their personal retirement accounts; but because their claim on Social Security depends utterly on Washington’s whim, certain politicians – for whom a beholden, exploitable electorate is their symbiont – will continue to employ cynical tactics designed to stampede seniors whenever it’s convenient.

A long time ago, in times seemingly more bleak than these (and in hopes of easing seniors out of the work force), America decided it would eradicate the financial fear associated with aging. Alas, what was embraced as a moral imperative has been turned into a never-ending teat of political opportunism. The real scandal is how cheaply we can be bought off.

The moral imperative remains, but shamelessness coming out of the White House demonstrates how the argument has been reframed. A phase-in of personal accounts – similar to the wildly popular and enormously successful Chilean plan – would shrink and ultimately eliminate any possibility that retirees (and those on the cusp) could be used as pawns in games of political chess.

Speaking of moral imperatives. ...