On 12/17/2012 10:14 AM, Richard Ruquist wrote:
In addition the United States has been borrowing from what we own. Our
indebtedness to ourselves from borrowing from the Social Security Fund
that was set up in Reagan's Administration is double our indebtedness
to China for example. My perspective is that the fund is a Republican
means to limit the effectiveness of Social Security. It's against the
law to borrow from it but that has not stopped the borrowing.


It's not against the law. It's exactly the opposite. The law as set up in 1934 requires that any SS surplus be invested in Treasury Bonds, i.e. loaned to the U.S. government. This was very sensibly set up so that the SS would not be influencing the stock market by investing (picking winners and losers). The SS trust fund is always held as Treasury Bonds. That has no effect on the debt. If the government weren't loaned that money it would just have to borrow from somewhere else. And it doesn't mean SS is broke. SS built up a surplus in anticipation of the baby-boomers retiring. Now it's paying out the surplus and the Treasury will have to borrow from elsewhere or tax to meet it's bond obligations (to SS and every other bond holder).

Brent

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