Two points: 1) as Jim has already indicated, the entitlements issue is
mostly a matter of our endlessly recycling, 'profits are private, losses
are public' health care system, which ladles public monies onto private
health insurance systems with minimal controls (Medicare Part D is the
most egregious example of such policy-making). 2) It is not a (purely
legal) question of who has the standing to sue. The question is whether
any other bond holder would react to the government's failure to pay
off a legitimate debt. Although the government has never failed to
honor a treasury bill, you seem to think that because it's a social
welfare entitlement, such a failure could be sequestered from its other
financial obligations. I disagree. Once the feds start picking and
choosing which U.S. government debts they'll honor, won't all treasury
notes be devalued?
Joel Blau
David B. Shemano wrote:
Joel Blau writes:
Are you less confident that social security will be paid than any other
government obligation? Unless your point is that social security is mere
social welfare, and hence readily dispensable, why is government
borrowing from the trust fund any less an obligatory debt?
Social security payments will be paid until the payments become unpopular.
Social security is relatively popular now because (1) the taxes are both stable
and hidden (the tax is paid by the employer before the wage check is given),
(2) the taxes are capped to maintain the argument that benefits are linked to
contributions and the the program is not redistributionist, and (3) most people
believe they will receive the payments when they get older. If entitlements
continue to increase as a share of government budgets, the programs will
ultimately have to require signicantly more taxation, and/or become explicitly
redistributionist. Furthermore, more and more workers will truly believe they
will receive nothing. At a certain point, the program will become sufficiently
unpopular and there will be a crisis.
Are you seriously asking "why is government borrowing from the trust fund any less an obligatory debt." Let's say the government, in its capacity as the US Treasury, fails to pay a treasury bill held by the government (as a bookkeeping entry), in its capacity as the Social Security Administration. Who exactly is going to sue who?
David Shemano
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