Dean Baker: Is Peter Peterson a Major Driver of the Country's Debt?

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Let's imagine that Wall Street investment banker and long-time Social Security foe Peter Peterson had $1 billion in government bonds (also known as "IOUs"). Suppose that he decided to sell them. According to Glenn Kessler, the Washington Post's fact checker, this would create a burden for the U.S. government.

This sale of bonds would displace other bonds that the United States might want to sell in the financial market. This would lead to higher interest rates on U.S. debt. Therefore Mr. Peterson is contributing to our deficit problem.

That may seem more than a little silly to readers, which it is. Yet, this is the same way in which Kessler says that Social Security will be creating a fiscal burden. The program has bought $2.6 trillion in government bonds which are part of the $14.3 trillion debt subject to the debt ceiling. It will be relying on the interest from these bonds to pay for some benefits for then next decade, just as Mr. Peterson may use interest from government bonds that he holds to pay for his living expenses or funding his anti-Social Security agenda.

Read more: http://www.businessinsider.com/is-peter-peterson-a-major-driver-of-the-countrys-debt-2011-7

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