Bad Bai

Matt Bai is back and playing his best Adam Nagourney role of concern trolling Democratic politics and policies. This time his target is Social Security and, not shockingly, Bai adopts conservative deficit hawk talking points which are devoid of any basis in reality in order to make the case that any Democrats who oppose Social Security cuts are nuts. Dean Baker takes Bai to task over his assertion that Treasury Bills are “often referred to as i.o.u.’s”:

This is of course absurd. The business pages of major newspapers are full of references to Treasury bonds all the time. The bonds are never referred to as “i.o.u.’s.” The article then includes the bizarre assertion about government bonds that the only way for the government to make good on the bonds it has outstanding: “is to issue mountains of new debt or to take the money from elsewhere in the federal budget, or perhaps impose significant tax increases — none of which seem like especially practical options for the long term.”

Bai’s opinion, it is radically at odds with perceptions in financial markets. These markets view it as almost inconceiable that the government will not honor its bonds, which is why the interest rate on long-term bonds is near its lowest level in the last 60 years.

Bai also describes the process of the government selling bonds in this absurd manner:

So this is sort of like saying that you’re rich because your friend has promised to give you 10 million bucks just as soon as he wins the lottery.

No, selling trust fund bonds is more like you gave your friend $10 million and he’s promised to pay you back $10 million, plus interest.

Scarecrow at FireDogLake (as well as Dean Baker above) both have problems that the Times ran Bai’s piece as news, when it’s clear he’s editorializing and advancing political opinions that aren’t based in reality. Scarecrow writes:

This is the big con, folks, maybe the biggest con in an era of big cons, and it’s all designed to take money paid by middle class and seniors and put aside for their retirements, and use it as a cover for tax cuts for the richest people in America. Matt Bai just told us he is a dupe in that con, but what excuse do the New York Times editors have?

I don’t think it’s surprising that a reporter who likes punching hippies is punching hippies on our key issue. But there is a real question about how some of this bunk slipped its way past the Times’ editors.

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