FORTUNE -- Do you think it would be a good idea for the federal government to act like Bernie Madoff? To take money from people for decades, only to say, "Sorry, I'm out of cash," when it comes time to pay them what they're owed?
It's hard to imagine anyone who would think that this is a good idea. However, it's exactly what's being proposed by people I'll call extremists, in order to be polite. The folks think that it's a great idea to not raise the government's debt ceiling. The wrinkle some of them are proposing this time is that we can have our country avoid defaulting on its debt by paying interest and principal on its borrowings when they come due, but not making other payments that the government is supposed to make.
I've seen a lot of stupid things in Washington, but this proposal is absolutely the stupidest. Not to mention the most immoral.
Why? In two words, "Social Security."
Social Security is an earned benefit. Beneficiaries (including my wife and me) have paid serious money in Social Security taxes for decades and decades, in return for the promise of benefits when we qualify for them. Unless Congress has the nerve to modify what current Social Security recipients are supposed to get -- fat chance of that happening! -- not making Social Security payments when they're due would be defaulting on a governmental promise to pay.
I won't even mention the fact that for many Social Security beneficiaries who live hand-to-mouth, not getting a check would be catastrophic. Even having a check delayed a month or so would be a huge problem for them. And remember, these are people who paid for their Social Security benefits, which are entitlements but aren't welfare.
You can make the same argument when it comes to government pensions. To not pay pensioners what they've earned from decades of labor is as much a default as not paying interest and principal to creditors when it comes due.
I have no idea if it's logistically possible for the government to make its debt payments but to avoid making other payments. But even if it's possible, it's a truly terrible idea.
Defaulting on our country's debt is repellant to me, and ought to be repellant to you. And defaulting on earned obligations such as Social Security and pensions, which are earned benefits, is equally repellant.
You'll notice that I'm not talking about the hideous impact an outright default on our nation's debt would have, or the horrible consequences of the government stiffing hospitals, military suppliers, and regular old vendors that have provided services to Uncle Sam and borrowed against the payments they are entitled to. That's because these topics have been so thoroughly discussed I have nothing to add.
But defaulting on obligations to Social Security recipients, pensioners, and others who have earned their benefits? That, my friends, would truly be a Madoff moment.
If it's fair to limit taxpayers' expense for retirement money being set aside by "the rich," it's vastly more fair to limit taxpayers' expense for Obama's own package.
FORTUNE -- It's a lot of fun to be able to make what you think are clear, simple points about the difference between what people in power propose for the likes of you and me, and what they get for themselves.
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FORTUNE -- One of the problems San Francisco interim Mayor Edwin Lee inherited when he took over for now Lt. Gov. Gavin Newsom was the city's underfunded pension system (see: San Francisco's Pension Smackdown). Backed by billionaire venture capitalist Michael Moritz, San Francisco Public Defender Jeff Adachi has been pressing an independent initiative to require public employees to contribute more to their pension plans. Labor MOREJun 3, 2011 11:42 AM ET
What did we learn from the bailouts of 2008 and 2009? Very little, based on what we're now seeing with the U.S. Postal Service.
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The challenge of meeting pension payments is starting to put a huge burden on the San Diego and California budgets, leading many of us to regret that more voices weren't raised in objection at the time these commitments were quietly made years ago. For MOREMay 18, 2011 1:43 PM ET
State pension funds are putting more of their money into higher risk investments like hedge funds, private equity, real estate, and commodities. But it won't fix their problems.
As most everyone knows (and as politicians and public workers in Wisconsin, New Jersey, and New York are acutely aware) state and local pension funds could use some big investment paydays. The funds have pension and retiree healthcare obligations that they can't afford MOREKatie Benner - Mar 30, 2011 12:19 PM ET
Big company pension funds are in their worst shape in at least 15 years, thanks in no small part to falling interest rates.
So says Bank of America Merrill Lynch, which issued a report Friday estimating the aggregate pension funding deficit at S&P 500 companies at $380 billion. That's up 44% from a year ago and represents a funding gap of almost 3% of the index's market capitalization.
The average defined benefit MOREColin Barr - Oct 29, 2010 12:56 PM ET
Low interest rates could leave U.S. companies scrambling to cover huge pension shortfalls, Fitch warned Monday.
The rating agency noted that the manic bond rally has benefited big issuers such as IBM (IBM) and Johnson & Johnson (JNJ), both of which were able to sell debt this month at record low yields. But the flip side of tumbling rates, Fitch analyst Mark Oline warns, is a fall in likely investment returns.
A drop in MOREColin Barr - Aug 23, 2010 2:07 PM ET
May's stock market selloff was predictably unhelpful for retirement savers.
The market decline wiped more than 4 percentage points off the typical corporate pension plan's funding status, Bank of New York Mellon said. The decline leaves the average program 82% funded – its lowest level since last October.
As recently as March, when stocks were still rising and credit spreads were tightening, pensions were 88% funded, the company said.
"May's results wiped out MOREColin Barr - Jun 4, 2010 11:18 AM ET
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