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View Diary: Al Gore was Right -- We DID Need a Lockbox (203 comments)

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  •  SS is not part of the Debt Ceiling problem, (3+ / 0-)
    Recommended by:
    worldlotus, Larsstephens, Bluefin

    it's part of the "Good Credit Problem" of the US.


    Unless of course the US wants its Credit Score,

    to zoom to 700.


    The General Fund is the Debtor.

    The FICA payers, are the Debtee.


    Thus the need for the Bank Vault,

    unless the Debtor, guarantees full payment, without squelching.


    PS.  My citizenship does not matter -- I pay all form of Taxation, when they apply.

    both Federal and Federal Insurance Contributions Act tax (FICA).

    I am a Taxpayer, No Choice about it.


    What is necessary to change a person is to change his awareness of himself.
    -- Maslow ...... my list.

    by jamess on Fri Jul 15, 2011 at 12:11:04 PM PDT

    [ Parent ]

    •  Oh lord (1+ / 0-)
      Recommended by:
      Bluefin

      The Social Security trust fund is very definitely part of the debt subject to ceiling. It's something like 2.7 trillion of the 14.3 trillion the Treasury owes.

      However, larger disbursement from the trust funds REDUCE the debt. Alternatively if we cut social security benefits across the board by 100 billion tomorrow, this would INCREASE the debt subject to ceiling.

      The ability of the US to service every bond it has ever issued--including the Trust Funds-- is not really in question. It's the willingness of the jackasses in congress to allow it. The debt ceiling is a self-imposed, not market imposed constraint.

      If the US gets tot he point that it cannot sell any more bonds to the public, or has to pay much higher interest rate to do so then paying off the Trust funds becomes much harder. And that is exactly why the rest of the budget has to be managed responsibly.

      •  The Trust Fund trumps the General Fund (4+ / 0-)
        Recommended by:
        KJG52, worldlotus, Larsstephens, Bluefin


        ... Pulls rank,  is the "Preferred Stockholder", per se.


        Social Security Online  

        Office of the Chief Actuary     

        Trust Fund Data -- Trust Fund FAQs

        What are the Social Security Trust Funds?

        The Social Security Trust Funds are the Old-Age and Survivors Insurance (OASI) and the Disability Insurance (DI) Trust Funds. These funds are accounts managed by the Department of the Treasury. They serve two purposes:

        (1) they provide an accounting mechanism for tracking all income to and disbursements from the trust funds, and

        (2) they hold the accumulated assets. These accumulated assets provide automatic spending authority to pay benefits.

        The Social Security Act limits trust fund expenditures to benefits and administrative costs.  [...]


        How are the trust funds invested?       

        By law, income to the trust funds must be invested, on a daily basis, in securities guaranteed as to both principal and interest by the Federal government. All securities held by the trust funds are "special issues" of the United States Treasury. Such securities are available only to the trust funds.

        In the past, the trust funds have held marketable Treasury securities, which are available to the general public. Unlike marketable securities, special issues can be redeemed at any time at face value.  [...]


        What happens to the taxes that go into the trust funds?      

        Tax income is deposited on a daily basis and is invested in "special-issue" securities. The cash exchanged for the securities goes into the general fund of the Treasury and is indistinguishable from other cash in the general fund.


        If all the income is invested, how do benefits get paid each month?

        Money to cover expenditures (mainly benefit payments) from the trust funds comes from the redemption or sale of securities held by the trust funds. When "special-issue" securities are redeemed, interest is paid.  [...]


        Far from being "worthless IOUs," the investments held by the trust funds are backed by the full faith and credit of the U.S. Government. The government has always repaid Social Security, with interest. The special-issue securities are, therefore, just as safe as U.S. Savings Bonds or other financial instruments of the Federal government.


        By law, income to the Trust Funds must be invested, on a daily basis, in securities guaranteed as to both principal and interest by the Federal government.


        What is necessary to change a person is to change his awareness of himself.
        -- Maslow ...... my list.

        by jamess on Fri Jul 15, 2011 at 12:33:16 PM PDT

        [ Parent ]

        •  Trust Fund is debt , General fund is cash (0+ / 0-)

          So it's not clear to me if you have actually read any of this as you repeatedly go on about the trust funds being stolen.

          In any case, Social Security can call in their bonds at face value at any time before the date of maturity if they need them to pay benefits. No one else can do that.

          It does  mean that if the government only has $170 billion and needs to pay out $350 billion in a  given month, that Social Security by law, has to get paid first.

          •  I haven't said "stolen" (1+ / 0-)
            Recommended by:
            Larsstephens

            I'm saying FICA investors, ie Workers,

            are owed the Benefits guaranteed by Law.


            Say Economides,

            "it's not clear to me if you have actually have" written any Diaries yourself,

            that actually spelling out your "deep knowledge" on the topic.


            You might want to give that a try, someday.  K?


            What is necessary to change a person is to change his awareness of himself.
            -- Maslow ...... my list.

            by jamess on Fri Jul 15, 2011 at 04:37:54 PM PDT

            [ Parent ]

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