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The “IOUs, bonds that have absolutely no market value” that SS holds are in fact the very most liquid asset in the world, U.S. Treasury bonds, which by statute would be sold in the open market if necessary.

Your comment on the marketability of SS bonds is contradicted by Wikipedia, SS trust fund:

“When program revenues exceed payments (i.e., the program is in surplus) the extra funds are borrowed and used by the government for other purposes, but a legal obligation to program recipients is created to the extent this occurs. These surpluses add to the Trust Fund. ...The fund is required by law to be invested in non-marketable securities issued and guaranteed by the “full faith and credit” of the federal government.”

Note the adjective: “non-marketable”. Walter Williams was right.

WW and Wikipedia are right, as far as they go. But as in all matters of government spending, there's a work-around that thwarts the original intention in order to facilitate overspending; that shortcut almost certainly became the standard procedure in my memory, what led me to write what I did.

Here's the work-around:

"...the U.S. Treasury issued the Social Security Trust Fund special bonds, which can be redeemed whenever the Social Security system has a current account deficit. ... By law the Treasury is bound to redeem any bonds presented to it by the Social Security Administration. And when the Treasury does, total government debt subject to the debt limit falls by the amount of the redemption—thus freeing up the Treasury's ability to issue new bonds equal in amount to the redeemed Trust Fund bonds. Therefore, meeting Social Security obligations in August, September and all future months in this fashion would add nothing to the gross government debt subject to the debt limit. Not, at least, until the $2.4 trillion Trust Fund is exhausted in 2038."

http://online.wsj.com/article/SB10001424053111903554904576458294273264416.html?mod=opinion_newsreel

In other words, it's the usual dodge: a shell game. SS is holding Social Security Trust Fund special bonds that they can't sell in the open market. But so what -- when they need cash, they just redeem them at the Treasury for cash. That Special Bond is now off the books, SS recipients are paid, there's that much less deficit, and the Treasury is out some cash. Next, Treasury sells some regular, very liquid Treasury Bonds for that same amount, "sterilizing" the SS transfer, and the deficit goes right back to where it was.