Obviously not for understanding policy. Â In a typically snide and vacuous piece yesterday, he rehearses the typically snide and vacuous Beltway Insider conventional wisdom that Social Security Is In Serious Trouble, criticizing those trying protect the program for being insufficiently bipartisan. Â Then he dismisses their arguments that the system is solvent:
The coalition bases its case on the idea that Social Security is actually in fine fiscal shape, since it has amassed a pile ofÂ Treasury Bills â€” often referred to as i.o.u.â€™s â€” in a dedicated trust fund. This is true enough, except that the only way for the government to actually make good on these i.o.u.â€™s is to issue mountains of new debt or to take the money from elsewhere in the federal budget, or perhaps impose significant tax increases â€” none of which seem like especially practical options for the long term. So this is sort of like saying that youâ€™re rich because your friend has promised to give you 10 million bucks just as soon as he wins the lottery.
Uh, no. Â I’m not an economist. Â I don’t pretend to have macroeconomic expertise, although those who do have it have not really shown that macroeconomics is anything more than shamanism. Â But even I know the difference between winning the lottery and holding Treasury Bills, perhaps the safest form of investment known to humanity at present. Â The Chinese have over $1 trillion worth of T-bills — are they counting on winning the lottery? Â So do all the big banks — mostly with TARP money. Â Are they playing, too? Â There’s a reason why T-bills have a low interest rate: the market thinks that they are a very good risk. Â If Bai wants to argue that the market makes no sense and is underpricing the risk, then he should make that argument. Â But then he’d have to know something.
Bai doesn’t have a hidden agenda: he just can’t be bothered with actually learning anything about what he writes. Â So he’s an easy mark for someone trying to spin him. Â And boy did he get spun here.
Oh, and incidentally: Treasury Bills are not “often referred to as i.o.u.s”. Â They’re often referred to as, well, Treasury Bills.