4 ms·
You 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
by OstiaAntica 16y ago
You 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.