Prometheus has the larger issue right. Trefoil, our disagreement was over your false statement that "Soc. Security is the largest owner of U.S. Treasuries." You can see your statement in this thread. My response was to question your source for that assertion. In your response you admitted that there were no Treasury Securities owned (that is the admission that your original assertion was false), but there there was a book entry in the general government ledger. You went on to assert that it didn't matter. I responded that it did matter becuase there was really nothing in the Soc. Sec. Trust fund, that there was no real asset in the sense that we understand assets and liabilities and that there was no real liability with the treasury in the same way. After that you focused on the issue of Treasury liability as if that was the point of our disagreement. Actualy that is tangential, an issue I used to argue that there were no real Treasury Securities in any Soc. Sec. account. I appreciate that you took the time to cite some basis for your thought and assertions. What you post shows clearly that there are no Treasury Securities in the sense that we understand 'securities.' Instead there is an accounting fiction, an "intergovernment transfer", deceptively called, "Government account series securities." These are not real securities...they are merely accounting notations that the revenue of one account has been spent to the benefit of other accounts. There are no real Securities in either the Social Security or Medicare "Trust Funds." There are not really any "Trusts" in the way we usually mean "Trust." As your link makes clear and as you can find better explanation at the CBO web site here: "http://www.cbo.gov/ftpdocs/108xx/doc10871/AppendixD.shtml", all the public source revenue contributions to these accounts are absorbed into the general government fund and all distributions for Social Security and Medicare are paid out of general funds...any surplus that is not spent is simply called a "government account series security"...it is simply an account in the general ledger of the government, there is no real legal security created in that sense that there is an asset in one account and a liability in another account ...its all intergovernmental...it is really all in the same "unified" account. Stated differently, it is the same as moving money from one pocket to another, or writing your self an IOU...I owe money to myself. You don't create assets and liabilities with your self when you do this...you can call it that but then the words assets and liabilities lose all useful common meaning. The truth is that the govenment takes in these "insurance" funds and then spends all the money on its general obligations, mostly consumption as Prometheus notes...and makes a book keeping note to itself of what it spent on the obligations of Social Security and Medicare...and a note of what it spent of the surplus contribution from Soc. Sec. and Medicare (there is no Medicare surplus). In this process it creates no assets, it spends all the money. In a macro economic sense the degree that there are surpluses acts to reduce the sale of real treasury securities needed to fund general obligations of the Government. In the future the process will act to increase the sale of real treasuries by the Governement to fund obligations. So, the idea of Soc. Sec. Trust fund with anything in it is just a deception of phony language used by the government. Certainly there are no legal U.S. Treasury securities in that account. I suppose most congressmen are ignorant about this reality but those on the relavent committee must understand the deception. Just becuase you can call it a security it doesn't make it so. I hope this puts to bed the false assertion that Social Security is the largest holder of U.S. Treasury Securities...I think that title properly belongs to Japan...with China and the Fed competing for second place.
America's 25 Richest Politicians Per the just released OpenSecrets list of top 25 wealthiest politicians in America, there are 12 republicans and 12 democrats (and Hillary, whatever she is). While we applaud the diversity among the country's richest "representatives", we can't help but wonder if these people actually "represent" the common man, or the man (such as themselves) having a minimal average net worth of $28 million. See the list at the bottom of the page. http://www.zerohedge.com/article/meet-americas-25-richest-politicians
All of the above are political assertions having no basis in the legal status of the trust fund itself. The Treasury has a legal obligation to pay the debts owed to Social Security. That legal obligation is recorded as a liability on the books of the Treasury. The politics of it were covered in the first cite, which gave the government's reasoning as to why only government securities are allowed in the Social Security trust fund. The legal status was covered by my second cite. Your assertions are your opinion only. They have no legal basis.
The total Minimum Net Worth of 25 richest USA politicians is $1.2 billion. The total Maximum Net Worth of 25 richest USA politicians is $4 billion. USA politcians are not bankrupt but USA is bankrupt. Why don't these USA politicians donate their personal money to help USA.
Trefoil, I think our discussion is exhausted at this point. You should talk to a lawyer about the legal status of Treasury Security compared to an internal accounting distinction in unified books. You have it backwards, the Treasury security has a legal status and the accounting distinction is political. Who is the party outside the government, in the matter of default based on the accounting entry, that will bring a claim against the government for payment? Clearly there can be a claim for breach of the Social Security contract itself, but there can be no judgement based on the accounting entry as a seperate security contract. Did you know that back in 1996 when there was an issue about increasing the debt ceiling...the Government plan was to "borrow" continuing operating funds by changing the accounting entries because they are not technically, legally, debt under the debt ceiling. That is what they call accounting tricks...an IOU on an IOU to your self. On the other hand a real treasury security is a creature of law and there are real counter parties who can seek remedies at law based on the security contract itself.
There is not one thing you have brought up as proof for your assertion. Not one. The SSA as an agency has legal standing to sue the Treasury if they default on their debt. What do you think it means to be in debt in the first place? That I can pay you when I feel like it? You have allowed your political viewpoint to completely erase the simple, objective fact that the government operates as separate legal entities, which is why, for instance, the IRS does not turn over tax records absent a subpeona to any other agency of the government. The SSA collects its own tax, and then uses that money to buy Federally backed securities. For the purposes of politics or economics, this may be a fig leaf, or not, but that's a subject for a different debate, not this one, and it's a far more complex subject than that boilerplate conservative argument you presented, which I've only read a million times. If you bothered to read my first cite while attempting to understand it as well, you'd realize that the subject of what the SSA is and isn't allowed to do is a far more involved subject than your argument makes it out to be. None of which is relevant to this anyway. You are trying to hand wave away the legal status of an agency of the government, and the liability that the Treasury has to that agency. Yes, this argument is exhausted, but only because you refuse to deal with the argument we're actually having, which is based on simple facts, not politics or economics. I can't help that.
Trefoil, I think our discussion is over, I have said all I can say. You simply won't admit that you said that Social Security was the largest holder of Treasury securities. That statement was misleading and untrue, and then when you tried to find these 'treasury securites' on the Social Security balance sheet or on the Treasury Balance sheet, you learned there were no such securities but there was instead a special accounting entry that acknowledged that the treasury spend the Soc. Sec. incoming revenue (actually instead of issuing treasury securities). So then you went on this equally misguided track of saying they are the same thing, rather than admit that what you said just wasn't so. Well I am sorry that the distinction matters and I have had great patience with your misunderstandinig and mangling of the law of such securities. The accounting entry is not a security...that distinction matters at law...I will not explain it to you any more unless you pay me a retainer...then we can take a tour through secured transactions law and the basis of contract, the issue of standing and the basis of a complaint for failure to make social security entitlement payments on a timely basis. My argument with you and your responses stand as written here and anyone can read and add to the discussion if they want...but I am bored with your thickness, so I am done.
Just so you don't think your time was wasted...I went through SOME of this thread...what I got was this: 1.)The US Treasury "borrowed" money for SS. 2.)The US Treasury did NOT give SS a note/bill/bond for the money. 3.)There is material legal difference between the IOU/account entry on Treasury's books and a REAL note/bond/bill. Case closed! I am both shocked and alarmed at the difference in accounting law between the IOU and actual notes/bonds/bills! -gastropod
Breen, on this point, i.e., the nature of the Treasury's debt obligations to Social Security, Trefoil is entirely correct. This question has been raised by Congress in hearings. Greenspan stated that the obligations to Social Security do represent a claim against real assets. What will happen, obviously, is that all holders of long-term U.S. debt obligations will get cheated, as ultimately there is no way to pay on this debt other than via inflated dollars. To think that increased productivity can result in enough revenue to pay off this debt without significant inflation is wishful thinking. I am appalled to hear people who should know better, such as Ron Paul, spout nonsense such as "Social Security is Bankrupt", or "Social Security" is a Ponzi scheme, when in fact Social Security is an example of just how well government can do things when they are well planned out and isolated from political tampering. Now only very minor tweaking is needed to keep Social Security financially sound based on actuarial principles. Social Security's main problem is that they loaned money to the US government, and the government used that money irresponsibly. Now there is not enough money to pay back what is owed without more borrowing.