About 'united states debt ceiling'|United States and the Debt Ceiling
In response to a question in a recent CBS interview of whether he could guarantee Social Security checks would be mailed out on August 3rd if the debt ceiling dispute is not resolved, President Obama stated "I cannot guarantee that those checks go out on August 3rd, if we haven't resolved this issue. Because there may simply not be the money in the coffers to do it." The fact of the matter is, President Obama knows this is merely a scare tactic, and Social Security checks should have nothing to do with the debt ceiling. Technically speaking, the United States government does not borrow money to send out social security checks. The Social Security trust fund actually loans the government money. Now, in theory, the social security deductions the government collects should go directly to make Social Security payments, and whatever is left over should be saved to make future payments. Right? Social Security should be an entirely different fund than the general fund. But that's not how it works, at all. According to www. ss.gov, the official website of the Social Security Administration, by law collected social security taxes must be used to buy government bonds. Not just any bonds, but bonds that are "special issues". The can be redeemed at any time for full face value, plus interest. Where does the cash go? It goes to the general fund of the United States government, to be spent as Congress sees fit. It's spent on anything and everything but social security. Of course, there is that pesky problem of making social security payments every month. When the social security administration needs to "cover expenditures" as they call it, they simply cash in some special issue bonds, and make their payments. In 2010, the Social Security Administration bought about 1,020 billion in bonds, and they sold 929 billion to cover expenditures. Yes, Social Security actually bought more bonds than they sold. That's not to say there's enough cash coming in from taxes to cover payments. In fact, 2010 was the first year that revenues were not enough to cover expenditures. But, the fund has not shown a negative since 1982, according to government figures. So, if the debt ceiling is not raised, and the government defaults on the debt, it will in fact hurt Social Security. But only because our government has decided to invest our money in itself, and not keep the fund separate. But as far as Social Security checks not being mailed on August 3rd that will be by choice and not by necessity. Incoming revenues could be used to cover current payments by simply using the money to buy back special issue bonds. Even if incoming revenues do not cover all of the outgoing payments, most could be made, or they all could be made at a moderately reduced rate. Obviously, for seniors and other dependent on Social Security, a reduced payment is not a great option. It does, however, beat the president's option of being completely cut off because he refuses to compromise on a debt deal. His use of the Social Security fund as a scare tactic to blame Republicans shows he is not ready to compromise. |
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United States Debt Ceiling - Blog Homepage Results
...ceiling negotiations with a great sense of anxiety. While a failure to raise the debt ceiling would be catastrophic for the United States (and the world), it is not yet time to start worrying. In fact, it would...
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