Of course not. No Fiscally responsible Country would squelch on their Debts like that -- SO why are they telling American Workers effectively the same thing:
Sorry your T-Bill Trust Fund investments, are worthless ... just pieces of paper ... IOU's with "No Real Assets" to back them up. So Take a hike future Social Security recipients; sorry you lose!
Would the Cato Institute describe the "full faith and credit" of the U.S. Government, the same way -- when it comes to paying back our Debts to China?
I doubt it. So why is acceptable to tell American Citizens just that?
Short Answer -- It's not. Not Acceptable. No way. No how.
A Debt is a debt.
A T-Bill is a T-Bill.
Exactly WHO owns the claims on those T-Bills -- does NOT change the Fact that the US Government has borrowed the money.
A Debt is a debt.
Yet over the years the Cato Institute has been actively promoting the idea that WHEN the US Govt owes its Own Citizens repayment -- SOMEHOW, THAT doesn't count.
Must be more of that Fuzzy Accounting ... making hay on our forever-fuzzy Attention Spans.
Over the years the Cato Institute has put a lot of effort into getting Americans to think that our Social Security Trust Fund deposits are really just "worthless IOUs"
-- A LOT of Effort. An IOU is just a "piece of paper", right?
Funny the same thing could be said about a T-Bills too -- they are just a "pieces of paper" too. No worries, American Taxpayers -- China will understand -- if "we" stiff them, right? Their Economy is Booming, right?
The Cato Institute even had a Newsletter devoted to casting doubt on the value of our Social Security Surplus funds. Surplus funds which by law get invested into U.S. Government Treasury Securities ... just like those equivalent "assets" that China underwrites for America, all the time ...
The Trust Fund, the Surplus, and the Real Social Security Problem (pdf)
by June O’Neill, director of the Center for the Study of Business and Government at Baruch College, City University of New York.
The Cato Project on: Social Security Privatization
April 9, 2002 -- SSP No. 26
Executive Summary
In reality, the Social Security Trust Fund is an accounting measure, not an accumulation of real assets that can be used to pay future benefits. That means current discussions of Social Security "lock boxes," or whether the Social Security "surplus" is being "raided," are essentially irrelevant to the program’s future. The federal government lacks a mechanism that would allow it to save today against the future demographic [...]
Worrying about the size of the trust fund is misguided. It is a fund in name only; it holds no real assets. Consequently, it does not generate funds to pay future benefits. And there are other problems. Social Security discourages saving and distorts work incentives, negatively affecting income in old age and national income in general. Despite its huge expenditures, it has not eliminated poverty among the elderly.
[...]
What Is the Trust Fund?
The phrase "Social Security Trust Fund" creates the illusion that it is an investment fund with tradable economic assets that can be held until needed to pay the benefits of future recipients. But in reality the fund functions only as a mechanism for tracking Social Security revenues and outlays, each year recording the difference between Social Security tax collections and payments to current beneficiaries. In most years receipts have exceeded benefits, creating a "Social Security surplus." [...] The surpluses are credited as net additions to the trust fund. On paper, the reserves that accumulate accumulate in the trust fund are recorded as investments in special Treasury bonds and collect interest that is also recorded as an addition to the fund. However, those investments do not provide the government as a whole with additional resources, as is the case when a private individual pays taxes. The investments are merely records of transfers from one part of the government to another.
To understand the process, one must recognize that Social Security is not an entity separate from the government in any real sense. Rather, it is an intrinsic part of a unified federal budget. Operationally, payroll tax receipts for Social Security are intermingled with income taxes and other federal revenues; Social Security benefits are a part of total federal outlays.
Hmmmm? According to this Cato Expert,
"the trust fund ... holds no real assets"
and
"The phrase 'Social Security Trust Fund' creates the illusion that it is an investment fund with tradable economic assets ..."
and
"The surpluses are credited as net additions to the trust fund. On paper, the reserves that accumulate accumulate in the trust fund are recorded as investments in special Treasury bonds and collect interest ... The investments are merely records of transfers"
Hmmm, I wonder how China would react (our new best Trading Buddy) ... if we told them that their Treasury bonds investments in the U.S. Govt -- are merely paper transactions, simply credit marks on a "meaningless" ledger ???
That there is really 'No There' -- There!
I doubt they would like it much. Neither should the America FICA Taxpayer either.
Here is another Cato Expert, who over a decade ago, told a bit more of the literally Facts behind the Accounting Mechanics of 'Social Security Trust Fund' Surpluses. But instead of arguing for raising the FICA Tax Ceiling, OR restraining the Out-of-Control General Fund borrowing against the Surplus Trust Fund -- Director Tanner instead goes on, to use these facts, to argue for the urgent need to Privatize the Program. Hmmm, who does he work for again ...
Pointless Debate over Social Security Trust Fund
by Michael D. Tanner, director of health and welfare studies at the Cato Institute.
This article appeared on cato.org on October 16, 1999.
Currently, the Social Security system is running a surplus, taking in more in taxes than it spends on benefits. That surplus is used to purchase government bonds -- the only purpose to which it can be put. The purchase of those bonds generates general revenue for the federal government and that money is spent on the operations of the federal government. That is a bad system, but it is how the trust fund was designed to work. The fund does not hold cash, never has held cash, and was not designed to hold cash.
Starting in 2014, the situation will reverse. Social Security will no longer run a surplus but instead will run a deficit. Social Security will begin spending more on benefits than it is taking in through taxes. To continue to pay those benefits, it will have to start redeeming the bonds in the trust fund. But, as President Clinton's own fiscal year 2000 budget admits, those bonds are not real economic assets. Rather, "they are claims on the Treasury that . . . will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures."
In financing terms, the Social Security trust fund is an irrelevancy. Come 2014, when Social Security's payroll tax income falls below its benefit obligations, the program will need large infusions of tax dollars. The existence of the Trust Fund means only that until 2034 those dollars will come through increased income taxes rather than increased payroll taxes.
SO, According to this Cato Expert" ...
"In financing terms, the Social Security trust fund is an irrelevancy."
Once again would Mr. Tanner like to tell China that their Treasury bonds investments in the U.S. Govt -- are Irrelevant ???
I seriously doubt it.
How much DOES the U.S. owe China anyways?
How Much Longer Will China Accept Low Returns On Treasury Bills?
by Hank Coleman is a staff writer for the Credit Score Blog -- 01/19/2011
China is, by far, the largest holder of United States debt. According to the latest numbers available, China owns approximately $900 billion worth of US Treasuries, T-Bills, and government bonds [$0.9 Trillion]. Interest rates in the United States have been stagnant for the past several years on Treasuries. So, the question remains, how much longer will China who these bonds and sit idly by earning an anemic rate of return? The answer may be a good long while but only because there are so few other options for China.
China is not about to "sit idly by" -- THEY expect Repayment on what they're owed ... They demand such repayment.
The American Worker who has dutifully paid into the Social Security 'Trust Fund' for decades on end, should expect no less. From OUR Government.
American Workers have built up quite a "Retirement Nest-Egg" Surplus, over the years. A $2.6 Trillion Dollar Surplus, as Senator Reid told America recently. A multi-Trillion dollar Trust Fund Surplus that has been invested in US Treasuries Securities -- very much like those that we sell to China.
"All excess funds must be invested in interest-bearing securities backed by the full faith and credit of the United States."
A Debt is a debt. Right? One Debt is as serious as another. Right?
A T-Bill is a T-Bill. No matter WHO holds "the paper". No matter if they are "merely accounting records", or not. The United States of America can not -- simply NOT Pay -- just because the Tax-raising branch of Govt, doesn't want to do so. (ie. Raise the much needed National Revenues, that is.)
And exactly how much have WE -- the American Worker -- manage to accumulate in all our surplus Treasury transactions over the years?
Trust Fund Data
February 3, 2011
Old-Age, Survivors, and Disability Insurance [OASDI]
Year | Total Income | Total Outgo
2001 $602,003,293,386.83 $438,915,617,678.71
2002 627,085,275,897.29 461,653,224,826.62
2003 631,885,790,121.09 479,086,453,028.13
2004 657,718,358,531.92 501,643,362,417.46
2005 701,758,171,960.50 529,937,504,804.51
2006 744,872,501,278.35 555,420,858,404.20
2007 784,889,453,834.60 594,501,473,005.86
2008 805,301,833,491.37 625,143,173,427.89
2009 807,490,352,910.12 685,801,033,978.42
2010 781,127,990,467.69 712,525,593,802.44
Old-Age, Survivors, and Disability Insurance [OASDI]
Year | Net increase in Assets | Assets at end of Year
2001 $163,087,675,708.12 $1,212,533,071,664.95
2002 165,432,051,070.67 1,377,965,122,735.62
2003 152,799,337,092.96 1,530,764,459,828.58
2004 156,074,996,114.46 1,686,839,455,943.04
2005 171,820,667,155.99 1,858,660,123,099.03
2006 189,451,642,874.15 2,048,111,765,973.18
2007 190,387,980,828.74 2,238,499,746,801.92
2008 180,158,660,063.48 2,418,658,406,865.40
2009 121,689,318,931.70 2,540,347,725,797.10
2010 68,602,396,665.25 2,608,950,122,462.35
[all amounts in actual dollars]
link to get even more Trust Fund details
That's a $2.6 Trillion Dollar Surplus. Looks like, Senator Reid was right.
American Workers "own" nearly 3 TIMES as much of America's "Good Credit", as China does !!
Woo hoo! Move over China. Get in line. We were here first. Why should you guys get all the Press?
And what does that kind of Retirement Surplus look like, on paper:
Income, Outgo, and Assets
Social Security -- Trust Fund Data
Assets grew from about $47 billion at the end of December 1986 to about $2,585 billion ($2.6 trillion) by the end of September 2010.
That's a Loooong ways from the "being broke" line.
Yet the Cato Institute "talking points" effort over the years, has managed to turn this Trust Fund Surplus, the one flush with Grade-A US Treasury Bond Securities, into something scary; into something untrustworthy; into something sketchy; into some sort of phantom, fuzzy, not-really a repayment obligation at all -- except for maybe, us the intended Beneficiaries. Come on, you guys, just tear up your worthless IOUs ... OK?
Here are some examples of how some people have taken Cato's "talking points" to heart. How their scary tactics are currently shaping the National Dialog on that "phantom" Social Security Trust Fund:
--------
Today’s CBO report has some bad news about the deficit. But CBO has some really, really bad news about Social Security: It’s officially broke.
Social Security is officially in the red. [...]
The crisis is now, since the vaunted "trust fund" is filled with non-recourse government bonds--essentially worthless pieces of paper. There's no there there when it comes to financing future benefits.
In other words, in order to make Social Security obligations our federal government has to rob Peter to pay Paul.
Social Security is not sustainable without reform. Simply put, it cannot pay promised future benefits with current levels of taxation. Yet raising taxes or cutting benefits will only make a bad deal worse.
-- The Cato Institute
--------
Funny how the Cato Institute has managed to convince American Workers OUR Treasury Bond Investments in America are second-class investments, impossible to pay back without making serious changes, without cutting, our promised Retiree Benefits. Sorry people, you never should have trusted us. Ooops.
Funny, how they have managed to turn U.S. Treasuries into something
-- that even China would have 'second thoughts' about investing in. Indeed they now are commonly expressing. Afterall would you trust a Country, that can't even pay back its own people?
Funny, how that has happened. Well, not "funny" exactly.
More like deliberately deceptive, about Who owes Whom, What, exactly?
The Social Security Trust Fund Surplus is doing quite well, Thank you very much. They have keep VERY detailed records.
The Trust Fund's reputation in the National Dialog, well that has taken a hit. No thanks to the General Fund's habit of very sloppy accounting, of swishy off-books record keeping to wage wars and stuff ... especially "fuzzy accounting" when it comes to our intra-citizenry debts ... and Obligations ... and Tax Responsibility, as patrotic American citizens.
Maybe 'A Debt is NOT Really a debt' afterall?
Maybe an American T-Bill IS Not Really worth the Paper it's print on, eh America?
Eh, China? How's that for a sales pitch. Trust us ... well NOT Really.
THAT is what Cato would have us believe. That the Govt really DOESN'T Owe its Citizens repayment, for what we have so generously lent them, over the many, many years.
Cato's Mis-information Mission -- Accomplished -- Almost ... or so the current national dialog, they've inspired, would have us believe ...
Funny how that happens.