George Bush, in an unbelievably irresponsible and dishonest act, has been doing everything he can to undermine public belief that the US government will honor its bond debt. Luckily, everyone who matters knows he’s lying - because if anyone took him seriously, the result would be the collapse of the US, and likely the world’s, economy.

Why would he take such a terrifyingly stupid risk? To destroy Social Security, of course.

Imagine this: On his next trip to Japan, President Bush visits the vault at the Bank of Japan, where that country’s $712 billion in United States government bonds is stored. There, as the cameras roll, he announces that the bonds, backed by the full faith and credit of the United States, are, in fact, worthless i.o.u.’s. He does the same thing when he visits China and so on around the world, until he has personally repudiated the entire $2 trillion of United States debt held by foreigners.

Mr. Bush rehearsed just that act on Tuesday, when he visited the office of the federal Bureau of Public Debt in Parkersburg, W.Va. He posed next to a file cabinet that holds the $1.7 trillion in Treasury securities that make up the Social Security trust fund. He tossed off a comment to the effect that the bonds were not “real assets.” Later, in a speech at a nearby university, he said: “There is no trust fund. Just i.o.u.’s that I saw firsthand.”

Those “i.o.u.’s” are government bonds - guarantees of payment with interest issued for money lent to the US government. They are widely regarded as the most secure investment instruments in the world - but only because they are “backed by the full faith and credit of the United States Government,” which is to say the willingness of the government to honor its legal debts and pay back the money. The bonds held by the Social Security program - which is to say the money paid into Social Security by generations of workers to build up a positive balance for when the long drawdown for the Boomer generation begins, and which was confiscated by the Bush Administration to counter its expenses from the Iraq war, military buildup, and tax breaks for the rich - are the very same bonds held by foreign governments (and millions of American citizens and investment firms) in return for money they also invested in our government. Claiming that those bonds are “worthless” - and implying that his administration, which incurred that debt by stealing the surplus that had been carefully built up under Bush Sr. and Clinton, will refuse to pay off the bonds that they themselves issued - is a declaration that an entire worldfull of investors and foreign governments, who hold trillions of dollars of US debt, have all lost their money. Wiping out the entire world’s investments in America would simply destroy those countries’ economies, bankrupt billions of people, send the dollar into the basement, and end forever foreign countries’ willingness to accept US monetary (or political) guarantees. But none of this will actually happen, because everyone involved in real finance knows that (a) Bush is lying outright, and (b) the real thinkers are not so stupid as to allow him to actually repudiate the US national debt and put this nation on a financial footing with the most corrupt, bankrupt Third World countries on the map.

In the hope of persuading people to privatize Social Security - a move that would only add to the growing debt burden for future generations - Mr. Bush wants Americans to believe that the trust fund is a joke. But if the trust fund is a joke, so is the full faith and credit of the United States.

Fortunately, the governments, institutions and individuals who hold United States debt can tell a publicity stunt from a policy statement. Still, casting aspersions on a basic obligation of the United States government is insulting and irresponsible.

It’s gotten to this point: the President is such a buffoon that he now bases his own major policies on the fact that everyone knows he’s lying; he openly expects that no one will take him seriously and on that ground deliberately says things that would be disastrous if they were said by anyone who could be believed or respected enough to imagine that his statements reflected his intended behavior.

I really, really want the adults back in charge.

UPDATE: Congressmember Peter Defazio (D-OR) is on the case:

Mr. DEFAZIO. Mr. Speaker, well, the President was on the road again today with yet another tightly controlled scripted, so-called town hall, before a carefully screened, invitation audience to tout to his plan to privatize Social Security.

Now, that is not unusual; in fact, the scripted town halls are all so similar that they can save the taxpayers a lot of money if he just stayed at Camp David or Crawford, Texas, and they just replayed the recordings of his earlier scripted, rehearsed town halls.

But the President did say today something extraordinary, in Parkersburg, West Virginia, and suggested something unconscionable. The President said, ‘‘There is no trust fund.’’ And then he went on to suggest that our Nation might not honor its debt to Social Security. This is what the President said does not exist
Let me read from this. This is a Social Security Trust Fund bond, considered the best investments in the world, U.S. Treasury Bond. This is the most privileged of Treasury bonds issued to Social Security, redeemable at any time at full face value, unlike any other bond that they issue. These are the most privileged of their bonds. The President says it is nothing but an IOU. Well, here is what it says: This bond is incontestable in the hands of the Federal Old Age and Survivors Insurance Trust Fund. The bond is supported by the full faith and credit of the United States. And the United States is pledged to the payment of the bond with respect to both principal and interest.

The President questions that? He is questioning whether we are going to repay our most privileged debt to Social Security. We have $7.9 trillion of debt. He is adding to it at a record rate, borrowing $1.3 million a minute.

Who is he saying we are going to repay and not repay? Are we going to repay the Chinese but not the Social Security Trust Fund? Are we going to repay President Bush, he happens to have some U.S. Treasury Bonds in his personal portfolio, but not the Social Security Trust Fund? Are we going to repay other wealthy investors around the world and in the U.S., but not the Social Security Trust Fund? We are going to selectively default on our debt.

Suggesting something like that, if the bond markets believed the President, the dollar would drop to near zero tomorrow, and there would be an economic catastrophe, but they do not believe him. They know this is just politics and rhetoric on his part. There is no intention of the Government of the United States defaulting on its debt. . . .

This is an extraordinary and reckless statement for the elected President of the United States to make.

(Link via Atrios.)