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> What should be mentioned is that Social Security could easily be well in the black with even higher payments to retirees by simply raising the income limit on

> What should be mentioned is that Social Security could easily be well in the black with even higher payments to retirees by simply raising the income limit on the social security tax. Obviously. It could also be in the black if you raised the rate 2x... > I especially don't like ignoring it like this because it implies the US government simply needs to ignore that obligation to the public, let millions retire with no safety net, and just default on trillions of debt. The US government might technically default - i.e. miss payments - but the payments will likely be delayed (due to political BS) rather than not paid in full w/ accrued interest. They've missed payments before. They'll probably miss them again. But they can literally print money. There's zero reason to truly default - and ENORMOUS consequences if they do. AFAIK, The Treasury at least claimed to be able to pay SS benefits in full even if the US "defaulted" (delayed) Treasury payments. It's hard for me to imagine a world in which the government just doesn't pay SS Treasuries. With enough political will, anything is possible. But even if political winds change dramatically - there's no way around how enormous the financial consequences would be to everyone in the country. I guess you can never underestimate how much politicians are willing to destroy this country to get a very small soundbite on TV - but I'm skeptical this is worth worrying about. Is it possible COLA for SS will be nerfed? That seems within the realm of possibility. Is it possible the Federal Government just decides to stop paying Treasuries SPECIFICALLY to SS? Super-dooper highly unlikely.

lazide 3y ago
I wonder if the US is going in the same direction as Greece/Italy on this front?
- throw0101a 3y ago
  Both of those have lower borrowing costs on their bonds than the US currently does: * http://investing.com/rates-bonds/greece-government-bonds http://investing.com/rates-bonds/greece-government-bonds * https://investing.com/rates-bonds/italy-government-bonds https://investing.com/rates-bonds/italy-government-bonds * https://investing.com/rates-bonds/usa-government-bonds https://investing.com/rates-bonds/usa-government-bonds * https://www.investing.com/rates-bonds/world-government-bonds https://www.investing.com/rates-bonds/world-government-bonds
- onlyrealcuzzo 3y ago
  No. 1) The US has real productivity growth 2) The US has population growth 3) The US Central Bank has no reason not to bail out the US Federal Government if needed. Greece/Italy would be like the US Central Bank (The Fed) not bailing out California. You can see why that might be politically popular. There's not really a politically popular reason not to bail out the US Government. A default would mean the end of 30-year fixed rate mortgages. Interest rates would be 18% again. House values would drop by 70% - and if you thought 2008 was bad - you better hold onto your butt. This would make The Great Depression look like a small recession. Which is all further reason why it WON'T happen. At pretty much any point, politicians could go back and pay back treasury holders in full w/ accrued interest, and then the problems are massively reduced. There's no political will to drive everyone in the country into a black hole for no reason.
  - JohnClark1337 3y ago
    [dead]
- HDThoreaun 3y ago
  US has complete control over its monetary policy. Eurozone countries don't, they're beholden to germany and the other big EU players.
throw0101a 3y ago
> The US government might technically default - i.e. miss payments - but the payments will likely be delayed (due to political BS) rather than not paid in full w/ accrued interest. Which happened in 1979 due to technical (?) issues: * https://www.reuters.com/article/usa-debt-default-idUSN1E76A0XA20110711 https://www.reuters.com/article/usa-debt-default-idUSN1E76A0...
_uhtu 3y ago
I mean it sounds like you're agreeing with me in a complicated way, the trust fund is still money owed to the public so it should be counted when we talk about the debt. Yes?
- onlyrealcuzzo 3y ago
  > I mean it sounds like you're agreeing with me in a complicated way, the trust fund is still money owed to the public so it should be counted when we talk about the debt. Yes? Yes - the SS Trust Fund holds $2.9T in Treasuries. They matter as much as the other 80% of Treasuries. The larger issue with SS is that it's not funded to meet its future obligations. That's a problem regardless of whether the US government defaults. I don't think it's particularly important to single out SS in this discussion about US debt. SS was designed that you'd get $x dollars in the future. It didn't mean that $x would buy you a certain lifestyle. There was no guarantee that ~95% of adults would still be working when you retire, and that you'd be able to get waited on in restaurants for $10. If the US government spends into oblivion - it affects everyone. Especially when it spends to pay people not to work. I don't think SS beneficiaries get hit particularly hard. What I think is problematic is people thinking that SS beneficiaries should be the only people immune to the US government overspending. As is typical in this country - no one wants to solve hard problems - they just want to make sure no problems affect them. SS is mostly pay-as-you-go (~93% of income). You don't pay into SS, and they buy treasuries, and hold them for you as some terrible investment portfolio. The amount of revenue SS gets from Treasury payments (~7%) is tiny compared to how much is paid into it annually. You're not technically paying for YOUR retirement. You're paying for someone else's retirement, and at any point it can become popular to reduce or increase SS payments. The Treasury piece is not particularly important to the conversation about total US debt.

lazide 3y ago

I wonder if the US is going in the same direction as Greece/Italy on this front?

throw0101a 3y ago
Both of those have lower borrowing costs on their bonds than the US currently does: * http://investing.com/rates-bonds/greece-government-bonds http://investing.com/rates-bonds/greece-government-bonds * https://investing.com/rates-bonds/italy-government-bonds https://investing.com/rates-bonds/italy-government-bonds * https://investing.com/rates-bonds/usa-government-bonds https://investing.com/rates-bonds/usa-government-bonds * https://www.investing.com/rates-bonds/world-government-bonds https://www.investing.com/rates-bonds/world-government-bonds
onlyrealcuzzo 3y ago
No. 1) The US has real productivity growth 2) The US has population growth 3) The US Central Bank has no reason not to bail out the US Federal Government if needed. Greece/Italy would be like the US Central Bank (The Fed) not bailing out California. You can see why that might be politically popular. There's not really a politically popular reason not to bail out the US Government. A default would mean the end of 30-year fixed rate mortgages. Interest rates would be 18% again. House values would drop by 70% - and if you thought 2008 was bad - you better hold onto your butt. This would make The Great Depression look like a small recession. Which is all further reason why it WON'T happen. At pretty much any point, politicians could go back and pay back treasury holders in full w/ accrued interest, and then the problems are massively reduced. There's no political will to drive everyone in the country into a black hole for no reason.
- JohnClark1337 3y ago
  [dead]
HDThoreaun 3y ago
US has complete control over its monetary policy. Eurozone countries don't, they're beholden to germany and the other big EU players.

throw0101a 3y ago

> The US government might technically default - i.e. miss payments - but the payments will likely be delayed (due to political BS) rather than not paid in full w/ accrued interest. Which happened in 1979 due to technical (?) issues: * https://www.reuters.com/article/usa-debt-default-idUSN1E76A0XA20110711 https://www.reuters.com/article/usa-debt-default-idUSN1E76A0...

_uhtu 3y ago

I mean it sounds like you're agreeing with me in a complicated way, the trust fund is still money owed to the public so it should be counted when we talk about the debt. Yes?

onlyrealcuzzo 3y ago
> I mean it sounds like you're agreeing with me in a complicated way, the trust fund is still money owed to the public so it should be counted when we talk about the debt. Yes? Yes - the SS Trust Fund holds $2.9T in Treasuries. They matter as much as the other 80% of Treasuries. The larger issue with SS is that it's not funded to meet its future obligations. That's a problem regardless of whether the US government defaults. I don't think it's particularly important to single out SS in this discussion about US debt. SS was designed that you'd get $x dollars in the future. It didn't mean that $x would buy you a certain lifestyle. There was no guarantee that ~95% of adults would still be working when you retire, and that you'd be able to get waited on in restaurants for $10. If the US government spends into oblivion - it affects everyone. Especially when it spends to pay people not to work. I don't think SS beneficiaries get hit particularly hard. What I think is problematic is people thinking that SS beneficiaries should be the only people immune to the US government overspending. As is typical in this country - no one wants to solve hard problems - they just want to make sure no problems affect them. SS is mostly pay-as-you-go (~93% of income). You don't pay into SS, and they buy treasuries, and hold them for you as some terrible investment portfolio. The amount of revenue SS gets from Treasury payments (~7%) is tiny compared to how much is paid into it annually. You're not technically paying for YOUR retirement. You're paying for someone else's retirement, and at any point it can become popular to reduce or increase SS payments. The Treasury piece is not particularly important to the conversation about total US debt.