$2.7 Trillion

$2.7 trillion.  That’s how much money Nancy Altman thinks the Federal government has laying around, ready to pay out to Social Security recipients.  I can’t believe she’s really that dumb (she’s able to write) but I have no other explanation.  Here’s a story from the Huffington Post.

First, Social Security has its own dedicated income stream for payment of benefits and associated administrative costs. Second, in addition to its current income, Social Security has an accumulated reserve of $2.7 trillion in its trust funds. That reserve is invested, as Congress has always required, in what has been the safest investment on Earth — treasury bonds backed by the full faith and credit of the United States. And third, the $2.7 trillion in treasury bonds held in the trust funds is included in the $14.3 trillion total debt that has reached the statutory limit.

So far so good.  We could quibble over the “safest investment on Earth” bullshit, but OK, many people believe that. Here’s where she goes whack:  Social Security’s Board of Trustees could and should exercise its right to redeem (cash in) as many of Social Security’s bonds as needed to pay benefits.

Ummm, excuse me Ms. Altman – just where will the government get the money to give to the Board of Trustee’s?  The board holds bonds.  They gave the government SSI tax money, the government gave the SSI Board some IOU’s.  The government then SPENT THE DAMN MONEY!!!  THERE IS NO MONEY TO GIVE TO THE BOARD!

Every $100 bond that the Board of Trustee’s cashes in needs to be borrowed by the government – with interest.  So if they cash in a $100 bond, the government needs to borrow AN ADDITIONAL $100 to convert that IOU into the cash needed to keep the check from bouncing.

Shit, if that $2.7 trillion was just lying around in cash, the government would be $2.7 trillion under  the debt limit. We wouldn’t be having this conversation about raising the debt limit at all.

gk

Share
%d bloggers like this: