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Financial Planning / Social Security Reform

URL:  http://boards.fool.com/ltltthe-social-security-quottrust-fundquot-28396769.aspx

Subject:  Re: Dead topic Date:  3/25/2010  6:32 PM
Author:  SeattlePioneer Number:  5236 of 5267

<<The Social Security "Trust Fund" is a hoax

Right wing LIE.

They have been borrowed by the US Government and in its place are IOU's

So, in other words they are invested in Treasury securities, which any investor with at least half a brain considers the safest possible investment. >>



The problem is, what is the impact on the Federal government of cashing in these bonds?

The government doesn't have the cash to pay the value of the bonds, so they are simply going to issue more debt to replace this debt. When you have trillions of dollars in IOUs, will the government be able to issue trillions of additional dollars of debt?

There is a limit on the ability of the government to do that, and we are likely to plumb the limits of that in the years ahead.

In the years when Medicare and Social Security taxes were in surplus, they reduced the apparent Federal deficits, allowing additional spending. Now the revenue shortages are reducing that ability to spend, and that will continue to get dramatically worse as revenue shortfalls become actual deficits rather than actual surpluses.

So it's not a Republican LIE, it's an actual fact of life. It's already cramping the ability of the Federal government to spend, and that's going to get a LOT worse.



Seattle Pioneer
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