How Much $$ of SS is in T-bills?

[BeFree]

We have folks here who have all the answers about SS, so they should be able to answer that question fairly easily.

And the follow up question: Can we cash in those T-bills?

[mmonk]

1. I'm not sure but I think the shift into T bills

started in the 90's. How much, I don't know.

[NoNothing]

2. None.

All of it is in special-issue, non-transferable treasury bonds.

As far as cashing them in, if by "we" you mean "the SSA," then yes, that is the plan: have Treasury buy the bonds back with cash from the Treasury to pay out the benefits not covered by revenues.

[BeFree]

4. Clarification

I called them T-bills, but I guess it is as you say treasury bonds. Special bonds.

So if SSA cashes in the bonds, where, or how, will Treasury get the cash?

[NoNothing]

5. The same way Treasury gets money for anything else

By borrowing it, raising taxes, or reallocating spending from something else.

[BeFree]

7. If they borrow it....

Wouldn't borrowing it add to the deficit?

I'm in favor of raising taxes. But just on those making over $250,000 a year and the already rich.

[NoNothing]

10. Yes it would add to the deficit

Tax hikes could cover the difference, but there is a limit to how much you can raise taxes (historically, revenues have not exceeded 20% of GDP even when the rates on the rich were 90%+), and we'll need tax revenue for other things too.

That's the root of the problem, lots of things that will need money, questionable ability for taxes to pay for it all.

[girl gone mad]

25. The government doesn't have to borrow or tax.

Nor is it necessary to reallocate funds.

Here's an example which clarifies how our monetary system actually works:

http://www.correntewire.com/fed_money_spreadsheet

[NoNothing]

32. Yes, it does

The Federal Reserve is technically independent of the U.S. Government. The fed could inflate the dollar buy buying up Treasury bonds, but the Treasury still has to issue the bonds.

And in any case, inflation *is* a tax, it's a tax on money.

[sinkingfeeling]

3. There is $2.4 trillion in the Trust fund (2008). It is held in 'special' US bonds that pay an

interest rate of 5.5%.

http://en.wikipedia.org/wiki/Social_Security_Trust_Fund

[BeFree]

6. So what's the problem?

There is plenty of money in SS.

Enough, I'd say, to increase benefits and lower the retirement age. But the pubbies are claiming the reverse?

[NoNothing]

9. No there isn't

Because bonds aren't money.

There are lots of bonds in the trust fund.

There is no money in the trust fund.

The problem is that to convert the bonds into money, the Treasury has to to come up with the money to buy the bond back. And, well, Treasury has been a little short of cash lately.

[sinkingfeeling]

11. The Trust funds will cover SS benefits until the year 2037. After that, SS will only be able to

pay about 75% of the benefits owed to retirees with the amount collected through payroll taxes (current levels).

[BeFree]

13. So

We are going to cash in the Trust fund bonds and use that money to pay benefits?

[sinkingfeeling]

17. That's how it works.

[BeFree]

31. That's how it works?

Where will the cash come from? If they sell more T-bills to raise the cash, won't that increase the deficit?

[alc]

28. plenty of money in SS to pay us

but not plenty of money in federal debt to pay SS.
From the widipedia link above

These (Trust Fund) balances are available to finance future benefit payments and other Trust Fund expenditures – but only in a bookkeeping sense.... They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures. The existence of large Trust Fund balances, therefore, does not, by itself, have any impact on the Government’s ability to pay benefits. (from FY 2000 Budget, Analytical Perspectives, p. 337)

The non-SS part of the government has agreed to pay the SS part of the government when the SS part asks. But the non-SS part has made no plans for paying the funds back or even admitted on public books that the debt exists.

This is why Gore (and others) called for the lock box. If SS had real bonds, then it could sell them to China, or me, or whoever buys treasury bonds. Or SS could cash them in on the normal schedule which the Treasury has already made plans to redeem. Instead, there is an agreement that the Treasury will find some way to come up with the money when SS asks. Or, the Treasury may say "now isn't a good time since we hadn't planned on paying you back yet, so how about cutting your benefits instead of asking us to come up with the money."

[NoNothing]

33. Having the trust fund hold tradable bonds

Doesn't change the situation at all.

Scenario 1: Trust fund needs money, it sells the bond to Treasury, who sells a bond to someone else to raise the cash.
Scenario 2: Trust fund needs money, it sells the bond to someone else to raise the cash.

Either way, you're borrowing the same amount of money. But in your scenario, the Trust Fund could be caught in a bad situation depending on the bond market.

[Skink]

8. Doesn't that mean payments are being made to the treasury?

[fasttense]

12. Good point, so in essence our Social Security retirement money is going to the treasury.

Who gives us bonds (special super Social Security bonds no less) and gives us 5.5% interest on our retirement money. It sounds like a loan to me.

It sounds like we Baby Boomers (and that is who that money is intended for) already gave a loan to the federal government. And now when it comes time to pay up on the loan, the US government wants to default. Now how is that for good faith and credit?

I say default on all bonds purchased by American citizens no just bonds purchased by Retiring Baby Boomer American citizens.

[Skink]

15. in 83 we didn't just raise taxes for the fund.

we also lowered the top tax rate as part of the deal saying that we are going to raise taxes later to collect.

Now people can't even get behind raising the cap to make the rich pay up.

[Indydem]

14. THERE IS NO TRUST FUND

Seriously, quit repeating that bullshit.

There are bonds issued by the government; essentially worthless paper that shows clear evidence that the American people have been swindled by their politicians for generations.

World War II, the Interstate System, the Space Race, The Great Society, Raygun's arms race, Bush's Tax cuts, and every part of government spending and waste over the last 80 years were spent, partially, from the Social Security fund, never reported as public debt and taxed from hard working Americans.

Now, after politicians of BOTH parties had a big party, spent all the money and patted eachother on the back, the party is over. There is no money in the treasury, and no money to pay back those bonds. If you think raising taxes on families making more than $250k is going to cover the social security shortfall, you are dreaming. If you think China, Japan, and our other creditors are going to keep letting us borrow borrow borrow to cover our debt, you are also dreaming. If you think that printing money to cover the debts we have incurred is going to end well, you are just a fool.

America is fucked, and no one is willing to blame the people who made it happen; the political class of both parties for the past 80 years.

[sinkingfeeling]

18. The US Treasury isn't going to default. If it does on SS, then the country will be

instantly reduced to a third world country and all of our assets will belong to others.

■The program’s shortfall is relatively modest, amounting to 0.7 percent of Gross Domestic Product (GDP) over the next 75 years (and 1.4 percent of GDP in 2084). A mix of tax increases and benefit modifications — carefully crafted to shield recipients of limited means, potentially make benefits more adequate for the neediest beneficiaries, and give ample notice to all participants — could put the program on a sound footing indefinitely.
■The 75-year Social Security shortfall is about the same size as the cost, over that period, of extending the 2001 and 2003 tax cuts for the richest 2 percent of Americans (those with incomes above $250,000 a year). Members of Congress cannot simultaneously claim that the tax cuts for people at the top are affordable while the Social Security shortfall constitutes a dire fiscal threat.

http://www.cbpp.org/cms/index.cfm?fa=view&id=3262

[Indydem]

19. Of COURSE they won't default!

They'll just cut benefits to the bone, and phase out the program all together over a few decades.

What do you think the Cat Food Comissiona and Alan Simpson are ALL ABOUT??

[sinkingfeeling]

26. Failing to cash the bonds is defaulting. Please stop with the hysteria.

[Skink]

22. we'll probably figure out some other way to bankrupt the country way before 2037.

[harun]

21. Those bonds are no more or less worthless than paper money.

I bet you have that and use it.

Stop sensationalizing everything.

[kentuck]

16. Either they borrowed it or they stole it?

Take your choice.

Either way, they have to pay it back.

The money was already in T-bills when they borrowed it. It was paid into the SS fund by the people and transferred to T-bills.

It was not in our Treasury as cash. They borrowed the T-bills that were in reserve for one purpose only, by law.

[kentuck]

20. How about Congress passes a law?

That the government cannot borrow from the SS fund?

Where would the money be in that instance? Would it be imaginary? Would it be in T-bills? Would it still be empty?

[Indydem]

23. It's GONE!

There is no money to borrow. It's already ALL BORROWED.

They used the revenue over the past 80 years to fund their pet projects and government wast. MIC and all that shit.

Now, the revenues tot he fund are no longer exceeding benefits paid out; there is no more money to borrow. Now it's time to start paying it back and it isn't going to happen.

The repukes and this president (who isn't much better on this issue) are going to gut SS and reduce benefits, increase taxes, and screw every working (and retired) person in America.

[kentuck]

24. So if we stop paying FICA taxes...?

What happens? They have to borrow it someplace? Which disproves your theory that it is gone.

[Indydem]

27. The money we pay in pays benefits.

The money that was paid into the system in the past, when the system ran a surplus, was rolled into the general fund and spent.

The money we are paying in curently is entirely consumed by current benefits to retirees.

[kentuck]

30. There is a law on the books...

That was passed when Social Security was created. The money paid in is for future retirement also. It was not a pay as you go system. The Congress, since the 1960's, have borrowed that money. The law is still on the books. The only way Congress could appropriate that money is to borrow it. Stop the nonsense that the fund is busted. It is not. It is backed by the US government. When they decide they don't want to pay that, then our country is bankrupt. Let them write off all the debt, including the $2 trillion owed to the Chinese. That is only repeating a Republican chant so they can destroy the SS sytem. Stop it.

[Ganja Ninja]

34. Exactly. The whole point of this is to discredit the system so people will

lose faith in it. That way they can con people into their scheme to privatize SS.

[girl gone mad]

29. Of course the government moved the surplus..

of fiat dollars into the general budget.

If you had a tree that could produce an unlimited supply of lemons whenever you wanted them, would you store up lemons in your refrigerator?

[BeFree]

35. Moved?

So... they moved the wealth of the workers into fiat money?

And you approve of the move?

What better way to destroy SS than to turn the wealth into a mere promise.

Ronald Reagan would be proud of you.

[Romulox]

37. It's like monetary perpetual motion! The money was only "moved" to foreign creditors!

The money will return to you, but only if you send this letter to the three people in list above your name! :silly:

[BeFree]

38. What better way to destroy SS?

The right wants to destroy SS, and what better way than to strip it of its assets and turn that wealth into fiat money?

[Romulox]

36. Zero $$. nt