Need a response to Coburn re SS notes "paper money."

[CTyankee]

Today on Morning Joe, in response to Harry Reid saying SS doesn't add a nickel to the deficit, he acknowledged that the SS Trust Fund had been "raided" over the years and, as he put it, replaced with "paper money." So he said that by having to redeem said "paper" (because we are now dipping into the Fund) really amounts to adding to the deficit.

I'd like some really good, hard pushback to this argument. I've noticed the repubs are having to face our argument re SS and the deficit.

MJ didn't have anyone to rebut Coburn...

[Scuba]

1. How about...

...you stole all the money and gave it to the wealthiest. Well, we're taking it back!

[earthside]

2. If the Trust Fund ...

... is indeed filled-up with U.S. Treasury bonds, well, if the federal government defaults on those, then the jig is up and the whole country's economy will have collapsed into a pile of rubble anyway.

So, Coburn's argument is baloney, Social Security is as secure as is the "full faith and credit of the United States of America."



Hmmm.

[CTyankee]

3. Good argument. As a matter of fact, if that is Coburn's idea about "paper money"

I wonder if he would be willing to hand me the paper dollars that he has in his wallet. If they are so worthless, why wouldn't he do that?

[DCKit]

4. Yeah, just like a freakin' mortgage note.

Except you don't owe the bank, you owe the people. Try it, and we'll throw you to the Teahadii (most of whom depend on SS to survive).

If we're going to act like Rome, maybe we should bring back the Coliseum and gladiatorial games. First up: Tea Party vs. The Congressmen they elected.

[Statistical]

5. Here is the reponse. That "paper money" is treasury bills.

SS gave Congress "cash" and in return got treasury bills.

The Chinese, the Japanese, the banks, the life insurance companies, the pension plans, the rich investors gave Congress cash and in return got treasury bills.

So when we repay the Chinese, the Japanese, and rich investors the money we borrowed it adds to the deficit. SS is no worse.

Even simpler concept:
When the bank gave you money for a house in return they got a bond (mortgage).
When you pay the bank back it contributes to your personal financial deficit.

SS lent money to the Treasury and in return got a bond. Not paying that bond is called a default. Intentionally not paying that bond IMHO is stealing.

[alc]

6. somethings wrong with the SS Trust Fund

Simpson's opinion is meaningless. But when you listen to what Pelosi, Obama, and other dems have said over the last year and what Gore was saying 10 years ago you have to conclude that there are details we don't know. These are some questions I have not been able to find reliable answers to:

1. What specifically is different about the "special bonds" in the fund compared to other bonds? We know they cannot be sold on the open market but what else?
2. When do the bonds mature? 1 year? 5 years? 30 years? 100 years? whenever the government feels like paying them back? This has a huge impact on whether they can help this year or any time before 2037.
3. How are they guaranteed to be paid back? Dollars? normal bonds? more "special bonds"? If they can be paid back with more special bonds of higher value then they are useless since those can't be sold on the open market.
4. Are they already included in the federal debt? I've found pretty convincing evidence that they are. And also that they are not. If they are not already included, they are a HUGE problem (a $3.5 trillion dollar problem). Agreeing to pay them off with dollars or normal bonds means adding $3.5 trillion dollars to our national debt (or printing $3.5 trillion). Even if our debt doesn't scare you, it does scare potential investors, and the IMF, and it will increase the cost of borrowing to add another $3 trillion.

Number 4 is the one I think is most important and likely to be true. The trust fund needs money this year. Not much, but enough will show up on the books to show that we are committed to paying back the fund and have to increase our debt (or print money) to do it. Investors will want a bigger returns on normal bonds. Citizens will feel (rightly) that they've been lied to by everyone except Gore for 10+ years. If true, the government has stolen the money by "borrowing" it from one set of books without listing it as a debt in the other set.

[madmom]

7. Do they or we (as a country) default on other holders of our bonds? These bonds

were supposed to be "Far from being "worthless IOUs," the investments held by the trust funds are backed by the full faith and credit of the U. S. Government. The government has always repaid Social Security, with interest. The special-issue securities are, therefore, just as safe as U.S. Savings Bonds or other financial instruments of the Federal government. " (according to the government's own website... http://www.ssa.gov/oact/progdata/fundFAQ.html )Would we say this to a country or a corp who is holding our bonds? Sorry we can't pay it, sucks to be you!

There is NOTHING wrong with Social Security, it doesn't need to be fixed. What needs to be fixed is the governments way of paying back the money it took/stole from SS.

In other words, if I get a loan and decide I don't have enough cash to pay it back, it is I who has the problem, not the bank. I cannot tell the bank they have to give me more money (free of charge, no less) so I can pay them back for the first loan, or take less than what they gave me to start.

I'll say it again...

There is NOTHING wrong with Social Security, it doesn't need to be fixed. What needs to be fixed is the governments way of paying back the money it took/stole from SS.

[Warren Stupidity]

8. Full faith and credit

Treasury notes are backed, constitutionally by the full faith and credit of the US government. All of them. Not just the ones owned by rich people, financial institutions, and sovereign funds.