January 28, 2011
This would have been an appropriate headline for an AP article which included a quote from North Dakota Senator Kent Conrad implying that it would be reasonable to default on the government bonds held by the Social Security trust fund:
“I’ve received the lash from those who say, ‘Well, you shouldn’t have to cut Social Security because there are trillions of dollars of assets.’ It is true there are trillions of dollars of assets. It is true that they’re backed by the full faith and credit of the United States. It is also true that the only way those bonds get redeemed is out of the current income of the United States.”
This assertion is true of all government bonds, however Mr. Conrad is clearly suggesting that it would for some reason be appropriate not to honor the bonds held by the Social Security trust fund. It is unusual for a prominent senator to suggest defaulting on the national debt. This fact should have been the central focus of the article.
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