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View Diary: The B.S. approach (48 comments)

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  •  Ignoring the real Social Security problem (1+ / 0-)
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    Social Security will not go bankrupt.
    It can't.

    It can, however, put a drag on the economy.

    That could happen in two ways:

    1. If the government honors the notes held in the Social Security Trust Fund -- and I presume that it will, although I'm not sure that there has ever been a ruling that the government must honor debts to itself -- that means borrowing more money which means selling more bonds.

    Depending on the state of the bond market, that could mean higher effective interest rates (ie, lower bond prices) and more money spent on paying debts instead of doing things that need to be done.

    2. The Social Security surplus amounts to an increase in the general fund because the Trust Fund is kept in the form of special T-Bills. When receipts no longer exceed payouts, that constitutes a lost revenue source that must be replaced by tax increases or budget cuts.

    LG: You know what? You got spunk. MR: Well, Yes... LG: I hate spunk!

    by dinotrac on Mon Feb 25, 2013 at 07:25:51 AM PST

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