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To: kabar

We’ve been through this before, kabar. The Trust Funds hold non-public debt issued by the U.S. Government. You can call them IOU’s if you wish, but an IOU is just a promise to pay, as is any other debt issue.

My point, which seemed to elude you in the last exchange, is that the non-public debt can be converted to cash by having the Treasure issue public debt in its place. The non-public debt held by the Trust Fund is then canceled in exchange for the cash, which is then used to pay SS retirees. Because both types of debt are counted against the debt ceiling, the total debt outstanding remains the same.

The text you bolded (apparently so that I would see it and understand) actually states that what I’m advocating is indeed possible (...those resources will need to come from federal revenues or additional borrowing...) All I’m suggesting is that the “additional borrowing” be undertaken.


122 posted on 07/25/2011 1:26:08 PM PDT by Norseman (Term Limits: 8 years is enough!)
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To: Norseman

Redeeming the IOUs will not increase the overall federal debt, but the real question is a legal one, i.e., can the federal government borrow money to redeem the IOUs thereby momentarily going beyond the debt ceiling. I have read/heard conflicting opinions on this. If it can be done, then there is absolutely no problem in paying SS benefits until the entire $2.6 trillion SSTF runs out despite the debt ceiling. If not, then revenue from the general fund must be prioritized to make up the shortfall. I am not equipped to answer the leagal question.


126 posted on 07/25/2011 1:48:31 PM PDT by kabar
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