The debt held by the U.S. Federal Government largely consists of Treasury department bonds of various denominations and maturities held as an asset by the Social Security Administration. For decades, the SSA was taking in more money than it was spending. Now that has changed, but at the time it would purchase U.S. Treasury Bonds in great abundance as if to squirrel money away for the future. For the federal government to “zero out” the debt by the SSA would be to admit that all the the extra money it was taking in over the years from U.S. citizens in the form of Social Security payroll taxes was spent on other unrelated things and will never come back to those citizens in the form of future benefits. Meaning that SSA will go from being technically solvent to being demonstrably bankrupt (and in need of a huge influx of new money to pay existing and new beneficiaries) in one nanosecond. How sanguine are we to be about that prospect? Wouldn’t this constitute punch #2 the proverbial one-two punch, destroying what shreds may be left of the federal government’s credibility?
Yes, one guy in new jersey. You are correct.