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My question: What is to stop the administration from literally looting the trust fund after the debt hits the debt ceiling?

The trust fund does not contain assets, just unfunded liabilities, which is why the trust funds are included in the $14.3 trillion national debt. Here is what the Congressional Budget Office said about trust funds:

When a trust fund receives payroll taxes or other income that is not needed to pay benefits immediately, the Treasury credits the fund and uses the excess cash to reduce the amount of new federal borrowing that is needed to finance the governmentwide deficit. That is, if other tax and spending policies are unchanged, the government borrows less from the public than it would in the absence of those excess funds. The reverse is the case when revenues for a trust fund program fall short of expenses. Thus, the balances of trust funds are not a measure of resources available to pay future obligations for the respective programs; those resources will need to come from federal revenues or additional borrowing in the years those obligations are due.

I guess it’s a two part question: 1) Could this be done legally? and 2) Would it be a good thing or a bad thing for those not wanting the debt ceiling to be raised?

I don't think it would be legal to take SS revenue from the payroll tax and use it for something else. The trust funds are included in the debt limit. SS is paying out more than it is taking in. The SSTF must cash in some of its IOUs to make up the shortfall. I guess the Administration could decide not to redeem the IOUs to make up the difference, but it would be the same as committing a default for publically held T-bills.

>>The trust fund does not contain assets, just unfunded liabilities, which is why the trust funds are included in the $14.3 trillion national debt. <<

I think you’ll find that the trust funds contain the other 5$ trillion or so of the debt issued under the $14.3 trillion debt ceiling. That is, they contain the non-public portion of the debt issued under the ceiling, the portion that you are referring to as an IOU.

You acknowledge as much when you say the trust funds are included in the national debt.

I think my question is a valid one. What’s to stop Obama from converting at least $50 bn of the SS trust funds non-public debt into public debt? Treasury would issue $50 bn T-bills, say, and transfer the $50 bn cash to the SS trust fund, canceling $50 bn of their non-public debt (so the total debt stays at $14.3 bn). The SS trust fund now has $50 bn in cash to pay benefits. I would be surprised if this wasn’t possible to do. I’m just not sure if they’re planning to try it, because I’ve seen no suggestion of it anywhere.

Beyond that, there are other trust funds that could be treated similarly. And then there’s the question of what would happen if they just raided the trust funds of however much non-public debt as they needed.

>>The trust fund does not contain assets, just unfunded liabilities...<

Actually, the unfunded liability of the Social Security trust fund is completely unrelated to any of the numbers we’ve been talking about. The fund doesn’t “contain” an unfunded liability, the way it contains non-public debt issues. Rather the unfunded liability is a measure of how out of balance the future liabilities are to the long term tax revenues plus the non-public debt held, discounted back to the present day. It’s essentially an unknowable number, given the uncertainties of all the variables, but attempts are made to at least estimate it.

The unfunded liability of just Social Security is probably approaching $20 trillion by now and is totally unrelated to the non-public debt issued to the trust fund.