Social Security, checks, and Rube Goldberg: Treasury Secretary Janet Yellen suggests that 50 million seniors “could stop receiving benefits for a time.”

American Thinker ^ | 02/08/2023 | Brenton Smith

[Do_Tar]

Like when Obama shut down National Parks. Somehow finding money for guards and barricades to do it.

[MinuteGal]

Your post # 4......POST OF THE DAY !!!

Leni

[Eleutheria5]

Yellen must be Republican.

[RoosterRedux]

Right. But I think those IOUs are government securities in that they are backed by the full faith and credit of the U.S. Government. In fact, I'm not sure the government has the ability to issue securities that are what we in the bond business call subordinated debt (i.e., junk bonds).

I think all Treasuries are full credit obligations. And I can't off the top of my head remember any "revenue bonds" issued by any national agency...but I might be overlooking something.

[Vaduz]

Debt ceiling must be increased or you will die panic pimp again.

It can be paid for with one loss of Biden spending agenda and all the other waste of money he doing the green gig alone is a panic pit.

Democrats no longer allow BS meters around them.

[SeekAndFind]

RE: Yellen must be Republican.

From her statements so far, How so?

[Eleutheria5]

She wants to cut social security!

[jimwatx]

This is a bluff the Dems use to pretend its the Republicans fault if their bloated budget doesn’t get passed. They wouldn’t dare try and withhold SS checks.

[cgbg]

I guess we should talk about what “full faith and credit of the government” means in the real world.

The real world is where no politician or economist can be found. :-)

If governments run short on cash then they have a few options:

—They can have the Central Bank issue new debt and effectively inflate the currency.
—They can raise taxes and if the Laffer curve does not kick in they might actually collect some
—They can default by extending maturities on their notes. I will pay you but not today—next year instead.
—They can default by refusing to pay interest on their notes today. I will pay you the interest at some future time.
—They can default by permanently refusing to pay principal and interest with two variations:
—Default to foreign creditors
—Default to all creditors

Now—virtually every government in history eventually does default on its obligations.

“Full faith and credit” is almost always a lie.

Sometimes that happens because the nation state fails and sometimes it can be some variation on the default options discussed here.

Bottom line—just between you and me (no economists and politicians allowed):

“Full faith and credit” does not mean squat.

[lgjhn23]

“..The person in office who tries this (and probably Yellen too) will get tarred and feathered....”

They’ll be getting a whole lot more than just tarred and feathered...a whole lot more.

[RoosterRedux]

I spent my career on Wall St as a senior investment banker, mostly on the bond side of the business. In my world, credit quality is everything and U.S. Treasuries are the pinnacle of credit in the world. They have never defaulted on anything, hence their securities are considered risk-free.

It is the full faith and credit of the United States that stand behind T-bonds and bills.

Does this mean that the U.S. government will never default? You better hope they don't because the investment world (including everything you own) will turn into a pile of dog poo.

[cgbg]

The current total debt (government plus personal) in the US is deep in the “high risk” zone.

What is holding it together right now is that every other country is worse.

[RoosterRedux]

Hard to argue with that. If we as a country don't start to act responsibly, we might end up causing a collapse of the entire world economy. And once the world's financial systems are broken, it will be most difficult to rebuild them.

[woodpusher]

There have been no funds in the Social Security Lockbox for more than sixty years. The funds must be invested in Federal bonds which are backed by the full faith and credit of the Federal government. Each month, the Federal government makes a deposit into a Social Security fund to pay that month's payments. The deposit cannot be made if it would cause a violation of the statutory debt limit. Therefore, if the debt limit is reached and not raised, Social Security beneficiaries would not receive payments upon the failure of the good faith and credit of the federal government.

https://www.ssa.gov/OACT/NOTES/pdf_notes/note142.pdf

ACTUARIAL NOTE

Number 142
January 1999

SOCIAL SECURITY ADMINISTRATION
Office of the Chief Actuary

SOCIAL SECURITY TRUST FUND INVESTMENT POLICIES AND PRACTICES

by Jeffrey L. Kunkel

At 1:

Current Investment Policies and Practices

With but one exception, the current policies governing investment of trust fund assets were adopted in 1960 or earlier. Many of these policies actually date back to the original Social Security Act of 1935.

At 2:

Three other statutory policies also govern trust fund investment. These varied in the early years of the Social Security program, but have been unchanged since 1960 or before. They provide that:

• Special obligations are the preferred investment vehicle. Prior to 1960, the law had generally given preference to the purchase of marketable obligations. Actual practice, however, was to invest largely in special obligations, because purchase of marketable obligations was viewed as potentially disruptive to capital markets. Since 1960, the law has provided that special obligations are to be purchased unless the Managing Trustee determines that the purchase of marketable obligations would be in the public interest. Purchase of marketable obligations has been quite limited, and has not occurred since 1980.

At 3:

The Department of the Treasury, acting on the instructions of the Managing Trustee (the Secretary of the Treasury), currently uses the following investment procedures for Social Security’s OASI and DI Trust Funds.

As individual income taxes and Social Security payroll taxes are received daily throughout a month, the general fund of the Treasury transfers to the trust funds an estimated proportion of these taxes until the total of the daily transfers equals a predetermined estimate. If the total of the daily transfers fails to meet this estimate by the end of the month, additional funds are transferred on the last business day to exactly meet the estimate. The estimated tax transfers are allocated between the two funds in proportion to the statutory OASI and DI tax rates. The transferred funds are immediately invested in certificates of indebtedness, the special obligations that mature on the following June 30. Other trust fund income during the month is also invested in certificates of indebtedness immediately upon receipt.

All trust fund investment in special obligations is, however, subject to the statutory limit on total public debt outstanding. The gross Federal debt includes amounts owed to Federal trust funds, including the Social Security trust funds. New Treasury obligations cannot be issued to the trust funds if doing so would cause the debt limit to be exceeded.

[sergeantdave]

American Thinker can take its clickbait trash and shove it where the sun don’t shine.

[Elsie]

Social Security, checks, and Rube Goldberg: Treasury Secretary Janet Yellen suggests that 50 million seniors “could stop receiving benefits for a time.”

Get back to me when you have something to say.

[cgbg]

In other news, Bernie Madoff notified his staff that no new funds may be paid out until he says so...

Bwahahahahahaha.

[Blood of Tyrants]

Why is Social Security running out of money, which we paid in to, but Welfare and Food stamps is not?

[zeugma]

Yeah, but the illegal aliens and welfare queens won’t miss a check.