[P-Marlowe]

That “Trust” fund is filled with IOUs called treasury securities. When SS payments exceed SS taxes (as they are doing now), the “Trust” fund has to redeem an IOU. When it presents the Treasury with a security to be redeemed, the Treasury must pay it. That payment comes out of the General Fund, which is why Obama said there may not be enough money to mail out checks.

But the swap does not incur any new debt, so the money is there to pay it. The money in the trust fund is money that was already borrowed and is included in the current national debt, so if the treasuries are cashed there is no increase in the debt. The Treasury has 2 trillion dollars of money that it can use to pay social security without increasing the national debt by even one penny.

This is why Obama is a bald faced liar. He knows it. Geithner knows it. Everyone in his administration knows that issuing checks to social security will not increase the debt and therefore the checks must go out. Their threat to old people is a despicable lie.

[kcvl]

CNBC’s John Harwood Blames GOP ‘Crazy Politics’ for Debt Ceiling Stalemate
By: Kyle Drennen | July 25, 2011 | 15:32

Appearing on Saturday’s NBC Today, CNBC’s John Harwood solely blamed House Republicans for the ongoing debt ceiling gridlock: “Speaker Boehner and President Obama, were negotiating in good faith. They wanted a deal....the House Republican caucus...would not accept what President Obama needed to make a deal, and that is real and significant tax hikes as a component.”  

http://m.newsbusters.org/

[okie01]

This is why Obama is a bald faced liar. He knows it. Geithner knows it. Everyone in his administration knows that issuing checks to social security will not increase the debt and therefore the checks must go out. Their threat to old people is a despicable lie.

Precisely. Social Security payments are ordained by law. And the money to make the payments is there -- no matter how you read the books.

So, why does the President of the United States and the Secretary of the Treasury keep referring to the Social Security payments as "problematic"?

Is it because they are uninformed and, thus, unaware of the law and the express financial arrangements that have been made to insure Social Security payments are made?

Or is it because they are conniving politicians, lying about the arrangements in order to politically threaten elderly people?

Hmmmmmmmmmmmmmmm, which might it be?

This stunt was beneath Bill Clinton...

[bt_dooftlook]

Sorry, but I have to disagree with you.

When SSA needs cash to make a payment to a SS recipient, they redeem a special Treasury security.

The Treasury is obligated by law to redeem these special securities in full (interest plus principal).

The Treasury takes cash from the General Fund to redeem these securities; if there is not enough cash flow to support the redemption, the Treasury must borrow the money (i.e. sell government debt)

That is why SS is a pay-as-you-go system (or Ponzi scheme, depending on your POV), why the Treasury may not be able to make payments, and why Obama inadvertently told the truth in exposing the lie of a “trust fund”.

[bt_dooftlook]

No, I do not agree. When SS presents a Treasury security for redemption, the Treasury is obligated to provide repayment of principal and interest in cash. Where does Treasury get the cash to cover a redemption? From general tax receipts, or, if cash flow is off, by selling government debt.

The trust fund contains only IOUs, which the government can only redeem with add’l debt. Obama was telling the truth in this case -