Marketplace Economy has an interview with a nitwit named Olivia Mitchell who, I am horrified to report, is executive director of the Pension Research Council at the Wharton School. Wharton, you may know, is one of the top business schools in the country, so I’m predicting that this country is in very deep shit, as you will soon see.
They are discussing the reserve status of the Social Security trust fund and Ms. Mitchell says that “the money actually has been spent.” Yes, she actually says that. She regards U.S. Treasury bonds held by the trust fund as money that has “already been spent.” She is an executive director of something at Wharton, and… We are just screwed.
It gets worse, as she goes on to say that, “we'll either have to raise taxes, or cut expenditures, or issue more debt to be able to pay the scheduled benefits.” This from an executive at Wharton School. Doomed, I tell you.
When the Social Security trust fund decides to cash in its bonds, the same thing will happen that happens when people who hold Treasury bonds cash them in every single business day; the U.S. will issue new bonds to replace them. The debt will be reduced by the amount of the cashed-in bonds, increased by the amount of the newly sold bonds, and net change in the amount of the federal debt will be precisely zero.
No new taxes, no reduction in expenditures, no additional debt.
If this is what Wharton is producing these days, imagine what average business schools are cranking out into our business environment. And we are expecting an economic recovery?
And note that there is only one comment following the article, which reads in its entirety, "Mitchell is correct. The 'trust fund' is zero." We are a nation of morons, led by idiots.