'Patriot Bonds' come marching in
War bonds are on sale.
The Series EE savings bonds bear the inscription "Patriot
Bond." In all other respects they are regular Series EE bonds.
The money raised by the bonds will go to the general fund and won't
be earmarked for any purpose. The bonds carry the same yield as
any other Series EE bond. The current yield, in effect through November,
is 3.96 percent.
The bonds sell at half face value and are available
in eight denominations from $50 to $10,000. Patriot Bonds can be
bought through financial institutions and through the Savings
Bonds Direct Web site.
After the Sept. 11 attacks, Congress passed at least
three measures calling for the Treasury to issue war bonds. The
Treasury was cool to the idea because war bonds don't make economic
sense right now. After the House passed a "Freedom Bonds Act"
and similar legislation started to make headway in the Senate, the
Treasury announced that Patriot Bonds would be available.
Sen. Mitch McConnell (R-Ky.), one of the most ardent
backers of war bonds, said the Treasury's decision came after he
and other co-sponsors of war bond legislation wrote a letter to
Treasury Secretary Paul O'Neill.
"I am excited that the Treasury Department is
acting on my call to establish war bonds," McConnell says,
adding that the public "is unified in its desire to take decisive
action and now will have the opportunity to contribute directly
to help rebuild the broken and retaliate against terrorism."
It's not true that Patriot Bonds will enable people
to "contribute directly," because money from the bonds
will simply flow into the general fund and won't be set aside specifically
for rebuilding or counterterrorism.
Economists have said that war bonds are a bad idea
now because they encourage people to save. Congress, the White House
and the Federal Reserve are encouraging Americans to spend as a
way to stimulate the faltering economy. President Bush, Federal
Reserve chairman Alan Greenspan, New York Mayor Rudolph Giuliani
and many others have urged people to give to charities, buy holiday
gifts and travel. They haven't been asking people to save money.
The last time the United States issued war bonds was
during World War II, when full employment collided with rationing,
and war bonds were seen as a way to remove money from circulation
and reduce inflation.
-- Updated: Dec. 12, 2001