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On the first, SS is running a surplus right now. They need to invest that surplus. The safest investment on earth is US treasury bonds, so that's what they bu
by jbooth 16y ago
On the first, SS is running a surplus right now. They need to invest that surplus. The safest investment on earth is US treasury bonds, so that's what they buy. It all made perfect sense until someone figured out you could spin it as "raiding the trust fund". The US has the same obligation on that debt to the SS trust fund as it does to anyone who buys a t-bill. The US has the same obligation on that debt to the SS trust fund as it does to anyone who buys a t-bill. See the "interest payments" section of the budget. They're not "IOUs" on a sticky pad or something.
On the second.. strictly speaking accurate and honestly speaking inaccurate. Debt isn't the point of this, everyone knows we have a deficit, the point is what % of spending goes where.
- anonymoushn 16y agoThe trust fund does not contain US treasury bonds. US treasury bonds can be transferred and as such they are counted as debt when calculating the total debt of the United States. The instruments held in the SS trust fund are non-transferrable and are not counted as debt. As soon as they are counted as debts and have nonzero secondary market value it will be reasonable to say that the trust fund itself has nonzero value.
- OstiaAntica 16y agoThis is mostly right. The trust fund "assets" are worthless, but the common national debt calculation does include the explicit obligation to repay the SS fund (but does not include the program's unfunded liabilities).
- OstiaAntica 16y agoYou are badly misinformed. For the SS surplus, the U.S. government "buys" special obligation bonds, not Treasurys. These bonds are not tradeable on any market and do not represent an actual financial asset, the way a Treasury bond does. They are literally pieces of paper in a cabinet in West Virginia. They are truly IOUs on a sticky pad. There are no assets behind them, and there isn't even a legal obligation for the government to repay them or anyone "contributing" to SS. (see http://en.wikipedia.org/wiki/Flemming_v._Nestor http://en.wikipedia.org/wiki/Flemming_v._Nestor) The interest payments in the budget are actual repayments to Treasury bond holders, but NOT interest payments on SS obligation bonds. The government makes the SS interest "payments" with additional IOUs to the trust fund, NOT actual tax dollars. This SS interest is an accounting tool only, and is not part of federal budget outlays.
- jbooth 16y agoYou're right, my bad.
- OstiaAntica 16y agoNo worries, because the special obligation bonds are administered by the Dept. of Treasury it is easy to confuse them with Treasury bills or bonds. But they are very different beasts!
- kevin_morrill 16y agoInteresting that Tyco and Enron execs are sitting in prison for doing something far short of this. The receipt is really out right fraud.