House Approves First War Bonds Since WWII
By Sarah Sparks
WASHINGTON – Amid patriotic drum thumping from members, the House yesterday approved the first war bonds act since World War II. But the reaction from the business community has been much less enthusiastic.
U.S. Rep. John E. Sweeney, R-N.Y., who introduced the bill, argued on the House floor that war bonds would be “an ideal vehicle for Americans to support efforts to bring those responsible for these attacks to justice. They will provide the American people an important and tangible method to be part of the effort that will be ongoing and endearing.”
Art. F. von der Linden, a certified financial planner for the Financial Planners Association of Massachusetts, agreed that “war bonds make a wonderful rallying point, but they take money out of the economy. The House got war bond fever, but I haven’t heard any public hue and cry for them.”
The bill, HR 3021, allows the Treasury Department to issue “Freedom Bonds,” either by creating a new bond in its savings bond class or by renaming its EE Series savings bonds.
The bill also may allow the Treasury to earmark the resulting money to pay for anti-terrorism programs. Last month the Senate passed companion legislation as part of its Treasury appropriations, and the measure is going to conference.
War bonds were last sold during World War II, when they helped direct civilian patriotic feelings toward the war effort. The decorative bond sheets sold in America, Germany, the Soviet Union and other countries during that time are now sold as collectors’ items with war memorabilia.
The bonds also helped to pay for defense and military spending and also kept a lid on inflation by pulling money from the economy, two things von der Linden says the Freedom Bonds will not do.
The United States was coming out of the Great Depression when the Treasury Department began advertising its World War II bonds. The government needed money to help pay for the war, von der Linden said. Now, with the government still operating under a surplus, “the system of government revenues is more sophisticated now than it was then,” he said. “The government has a lot of ways to finance this war.”
Pete Hollenbach, spokesman for the Treasury Department’s Office of Public Debt, which produces bonds, said the department has not begun to plan design of the bond and has no estimate on how long it would take to produce the new bonds if they are approved.
Von der Linden said the war bonds would be a patriotic plus, but he thought they would harm the economy more than help it. “Look at the tax break,” he said, “If everyone who got $300 turned around and stuck it into war bonds, it wouldn’t have accomplished much.”
