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Home Publications Blogs Beat the Press Post Does a Nice Job on Social Security and the Debt Ceiling

Post Does a Nice Job on Social Security and the Debt Ceiling

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Thursday, 14 July 2011 04:12
Glenn Kessler, the Post's Fact Checker, did a nice job trying to pin down the law on whether Social Security benefits can still be paid once we have hit the debt ceiling. This is a tough one because payment of benefits would draw down the trust fund, which is part of the $14.3 trillion debt, dollar for dollar. This means that they would not add to the debt and push the government over the ceiling. Still, it is not entirely clear that the payments would be kosher.
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Why the uncertainty?
written by Jack, July 18, 2011 2:17
If the assets of the Trust Fund are represented by Special Treasury notes, which are in turn representative of a debt owed by the Treasury to the Trust Fund having been utilized to supplement the general budget in the past, waht is the actual mechanism to liquidate those Special Treasury notes and utilize the procedes to pay benefits? Is that even necessary in a system that controls its own money supply? It seems little more than an accounting procedure to allow Treasury to issue benefit checks against the Trust Fund account. Is that any different from the idea that FICA deductions, the pay-as-u-go aspect of Social Security, are deposited into the Trust Fund and become immediately available to the Treasury as funds for benefits distribution. What is the basis for the uncertainty inherent in the last statement of the post, "Still, it is not entirely clear that the payments would be kosher."?

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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