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Home Publications Blogs Beat the Press Senator Kent Conrad Advocates Default on the National Debt

Senator Kent Conrad Advocates Default on the National Debt

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Friday, 28 January 2011 06:39

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.


Comments (3)Add Comment
Default is Essential for USA to Attain Argentinian Living Standards
written by izzatzo, January 28, 2011 7:25
It is unusual for a prominent senator to suggest defaulting on the national debt.


Ridiculous. Senator Conrad supported Angelo Mozilo of Countrywide Financial to create the bubble and recession, but after reading Beat the Press both decided to use bond default as the road to recovery and achieve living standards equal to Argentina. Don't mock your supporters Whose Your Nanny.

Conrad is a senator not seeking re-election from a state with full employment in the middle of the Great Recession, with a statewide population no more than that of a large city in most states.

Who do you think runs this country anyway Whose Your Nanny? Real Americans from tiny towns in the cold north or tanned people like Mozilo who take vacations all over the world.

Stupid liberals.
Daffy Default theory lacks evidence
written by AndrewDover, January 28, 2011 8:49
So I claim: "the only way to eat a banana is to peel it first." According to your twisted logic, I'm advocating not eating bananas. Logic does not work that way.



Therefore,

So, the only way that US bonds get redeemed is out of the US current income.
...
written by skeptonomist, January 28, 2011 9:28
Suggesting default has been unusual up to now, but the federal situation is actually parallel to that of states. Republicans will apparently seriously push legislation to allow states to declare bankruptcy. The objective is obviously to allow default on pension obligations, but not bonds (Wall street would not like states to default on bonds). This would be tricky and such legislation will not pass this term, but if Republicans control both houses in the future and pass such a bill it may be held up as an example of selective default.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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