Friday, September 27, 2013
Fortune mag editor writes that debt ceiling debacle could turn Social Security into a "Madoff scheme", but he doesn't sound right on how the law really works
Allan Sloan, of Fortune, has an op-ed in the “Deals” page “A payment plan no better than Madoff’s”, p. A19, of the Washington Post Friday morning, Economy and Business section. The link is here.
Of course, he’s referring to Social Security payments in case of a failure to raise the debt ceiling by mid October.
However, Social Security is a preferred bond holder, and could probably litigate to get first in line to get its regular payments.
Even so, a few reckless politicians have suggested that better off retirees give up their benefits to help solve the crisis. This is no way to run a democracy; it’s the way a warlord works. Technically, Congress could pass a law to cut off benefits even for retirees receiving benefits now if they have over certain incomes or certain assets. That sounds like expropriation, which is a favorite cry from the Left, not the Right. But a few reckless politicians have suggested ideas like this. The problem is that, as we have covered, retirees don’t “own” their benefits the way they own private annuities. Even so, a law like that would not, as I understand things, do anything at all about a federal default. And retiree asset values would plunge after a default, so the idea of asking for sacrifice is particularly galling. But I have heard talk like this.