Why a default really could bankrupt Social Security

Until a few days ago I was with those who questioned why a default would affect Social Security, since Social Security has a dedicated tax. However it will, and could even end Social Security.

To understand why, go back to the 2000 election, and also to a disastrous decision made during last December's lame duck session. Social Security is supposed to have a dedicated source of revenue, the Social Security payroll tax that is taken out every time we get a paycheck (plus an equal amount that our employer contributes that we don't even see.) Al Gore, concerned about federal agencies borrowing from the Social Security trust fund (supposedly a record of everything that was borrowed is kept in a file cabinet in the H.J. Hintgen Building in Parkersburg, West Virginia near the banks of the Ohio river) proposed to put Social Security in a 'lockbox' and prohibit Congress or any federal agency from raiding the Social Security trust fund. Of course we know what happened in 2000, and along with the end of the Gore candidacy went the idea of a 'lockbox.' Borrowing from the fund has only accelerated rapidly since then, so that most (by some estimates virtually all) of the money that is supposed to be in it has been replaced with I.O.U.'s now kept in the Hintgen Building. Then last December, as part of the 'compromise' budget proposal, payroll taxes were cut by about a third. This immediately unbalanced the Social Security account in that revenues coming in were much less than what was going out. Of course there is always that trust fund, right?

Well not if we default. If we default then there is one debt the government can wipe off the books and not pay back without suffering the adverse affects of a default on the value of the dollar in the international currency market. That debt is to toss the file cabinet out the window of the Hintgen Building and into the river, because according to bankers in New York or Switzerland or Hong Kong, that would be an internal U.S. government debt.

Don't kid yourself. This could happen, and it is not that far from happening.

Once again, Bill Clinton says something that will boomerang against Hillary

It's been noted that Bill Clinton keeps giving the Hillary Clinton campaign headaches, and at times he's been more of a net negative than a positive. Most notably, it was Bill Clinton who first played the race card, suggesting in South Carolina that African-American voters were only voting for Obama because he was black and comparing him to 'Jesse Jackson,' thereby earning Clinton the mass defection of the previously sizeable number of African-American voters who had been supporting her in that state and elsewhere.

Well, he said something that will give her campaign heartburn again Sunday while campaigning in West Virginia. In that state, polls have been suggesting that she will win big, maybe even by more than forty percent (which would be a 70-30 percent pasting.) Of course that won't matter because well over 90% of the pledged delegates have already been chosen for the convention and West Virginia's puny delegate total of 28 delegates wouldn't do much, even if Clinton won three quarters of them (21-7 which would be a margin of +14, insufficient to change the delegate reality in which Obama has increased his margin just of superdelegates by more than fourteen just since last Tuesday.) But rather than setting her up to bask in the glow of a big win, he inexplicably raised the bar to an impossibly high level. According to ABC News he said about West Virginia:

You have to realize that if you show up in enough numbers, and your neighbors in Kentucky do, and we have a good run through the rest of these states," asserted Clinton, "We gotta have your help and get the largest number of people to show up on election day. See all this stuff you are hearing about is an attempt to discourage you. That's what this is, pure and simple, hoping, well, Hillary can get eighty percent of the vote in West Virginia, and if only 100,000 people show up it is not enough. But if 600,000 people show up, and you say we want a president than you will see the earth move.

Let's look at what he said in terms of what Bill is saying defines an 'earth-shaking' Clinton victory: 1. He is suggesting that 600,000 people need to show up to vote in the Democratic primary. Even in this year of record high turnout in primary elections, that would be extraordinary. In fact that would be nearly every registered Democrat in the state. 2. He is saying that Hillary can get 80 percent of the vote. That would be a sixty point blowout. Impressive for sure. But virtually impossible, even for Hillary Clinton in the West Virginia primary.

So now, thanks to Bill, no matter how badly things go in West Virginia on Tuesday, all the Obama campaign has to do is quote back Bill Clinton and suggest that Hillary didn't win as impressively as she was supposed to. Bill Clinton has just turned what should be a blowout win by any standard for Hillary Clinton into what can be described as 'underperforming expectations.' Conversely, by setting the bar so low for Obama (20%), Bill Clinton has in effect given him a way to say he has some momentum, even in a state in which over 90% of the voters are white.

Once again, Hillary's worst enemy isn't the media, the anti-war movement, the vast right-wing conspiracy or any other active candidate. Her worst enemy is, well we know who it is.