Saturday, 23 July 2011

US Social Security cheques are covered. Obama can't legally stop them.

Misinformation from the President - “I cannot guarantee that those [Social Security] 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.” (CBS interview).

There really is a Social Security Trust Fund with trustees and the fund holds about $2.4 trillion in US treasuries which it can sell at any time to cover the cheques. When the fund asks the government to redeem a treasury bond, the US national debt goes down by that amount and the government can then issue another bond without breaching the debt ceiling.  In addition to the reserve, there is a dedicated stream of new cash covering cheques and admin costs.  The $2.4 trillion is not off the books, it is included in the $14.3 trillion debt limit.

Thomas Saving
Nancy Altman
Mark S. Scarberry
H/T at PJ Tatler linking to legal scholars Altman and Scarberry's  article at the Huffington Post and to a former trustee of the fund, Thomas Saving, who wrote in the Wall Street Journal.

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