I don't see any utility to that. SS is now running in the red, so it is already cashing in its IOUs, which more than likely adds to the public debt since we borrow 41 cents of every federal dollar spent. And the publicly held debt is far more dangerous to the health of the nation than owing the money to ourselves. The Chinese and anyone else can buy the market T-bills.
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).
Where is the government going to come up with the additional $50 billion? We are already at the limit of our debt. Treasury must have buyers. And to what end would that serve? Cash from where? What is the advantage of increasing our public debt and decreasing our Intraovernmental debt?
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.
You have lost me. SS already has a revenue stream. Right now it is running in the red, which is why it is cashing in some of its T-bills to pay benefits. The General Fund is redeeming these IOUs so SS can pay benefits. The impact on the national debt is neutral.
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.
I provide you with the CBO description of the trust funds. They don't contain assets, just unfunded liabilites. Why would anyone "raid" a trust fund for IOUs? What the USG is doing now is to take some of the money from trust funds that are running a surplus and using that money to pay bills. SS is not running a surplus nor is the Medicare trust fund.
It sounds like you’re missing my point.
The “utility” in doing what I’m suggesting, assuming it can be done (which is my question, whether it can legally be done) is that it would enable Obama to spring at $50 billion from the SS trust fund in August and possibly a nearly equivalent amount from other trust funds. This could give him an additional $100 billion to allocate in August, so instead of coming up $140 billion short, he’s only $40 billion short of making all the August payments.
You ask where he gets the additional $50 billion. That’s the process I was describing. You convert it from non-public debt to public debt by issuing public T-bills and canceling the equivalent amount of non-public debt (so the total debt remains under the debt ceiling.)
I’m not sure what to make of this, exactly. I’m really just wondering if it could be done, and if so, if anyone in the government has contemplated doing it. For all I know, there could well be a law prohibiting it, not that the current administration would feel constrained by any such law.
The non-public debt holding is, after all, an asset to the trust fund. I’m wondering if that asset can be converted to public debt, raising an equivalent amount of cash from the public in the process, that’s all.