Disaster Capitalism: Is delaying SS checks the kabuki crisis the RW needs for "Grand Bargain"?

[Faryn Balyncd]

Despite the $2.6 trillion balance of the SS Trust Fund, designed with the express purpose of separating SS transactions from general Treasury transactions, we are now hearing hints that SS checks may be delayed if the debt ceiling is not raised by October 17.


The Republican desires to resuscitate hopes of a "Grand Bargain" to finally achieve their dream of "chained CPI" and Medicare cuts, has been reported met not only with rejection, but appropriately with dismissive laughter.


While the Republican strategy of endless debt ceiling crises including shutdown has not achieved their goals, is the delay of SS checks the Shock Doctrine crisis needed to create political pressure for the revival of a "chained CPI"/Medicare cut "Grand Bargain"?


If so, on what legal, constitutional basis can the Trustees of the Social Security Trust Fund be prevented from using the $2.6 trillion balance, created from the surpluses of lifetimes of SS contributions, to meet existing obligations?


Will we persevere to prevent the gutting of SS and Medicare? Or are we back to kabuki theater?

[antigop]

1. I have asked myself the same question...is this "disaster capitalism"

where the republicans force a default...international chaos ensues...to get things back to "normal" the dems and Obama agree to SS and Medicare cuts.

This is what the repugs have waited for for a long time. This is their moment -- a chance to cut SS and Medicare.

They take advantage of the chaos to ram through something that would never pass in "normal", non-chaotic times.

[OhioChick]

5. I must say that this has crossed my mind, as well n/t

[djean111]

2. Since SS is already funded, why/how can the checks be delayed?

I would sincerely like to know.

[Recursion]

7. Treasury has to borrow more to convert the Trust Fund's bonds into cash

Last edited Fri Oct 4, 2013, 01:39 PM - Edit history (1)

And since Trust Fund's bonds are not open-market bonds, they're not part of the debt ceiling calculation, meaning that if no new borrowing is authorized, the Treasury can't convert the Trust Fund's bonds into cash.

[oldhippie]

12. You know that, I know that, but very few people ....

.... on this site understand whatthat means, and they really don't want to hear further explanations.

I'm actually surprised (but happy) you even bothered to respond. Every time I have seen this explained the poster gets slammed by angry non-accountants.

[leftstreet]

3. The GOP already rejected Obama's chained CPI offer

Would they need to stage a crisis to get something they've already been offered?

[Faryn Balyncd]

4. The GOP wants most everything -- chained CPI, MC cuts, selling off public lands ......

President Obama has demonstrated most admirable resolve in this crisis.

The hint that SS checks may be delayed, however, seems bothersome from at least two angles, however: First, that it would appear that the President is not preparing to take the position that disbursements from the Trust Fund are not effected by the debt ceiling issue, even though legally separate and funded through the 2030's. Second, that an atmosphere of delayed SS checks might create exactly the kind of crisis mentality required for a Shock Doctrine attack on programs that have withstood those attacks so far.

As to what the GOP may want in any revival of "Grand Bargain" negotiations, I have no idea what that might be limited to. A Republican has proposed selling off several million acres of public land. They despise the National Park system (unless under use by corporations, which remain in operation even during the shutdown of all other parklands.)

The GOP's desires are expansive.

[Recursion]

6. I'm not sure I understand your question about the Trust Fund

If so, on what legal, constitutional basis can the Trustees of the Social Security Trust Fund be prevented from using the $2.6 trillion balance, created from the surpluses of lifetimes of SS contributions, to meet existing obligations?

Because they can't send seniors bonds, which is what's in the Trust Fund. They have to go to the Treasury to convert them into cash. When the Treasury doesn't have that cash on hand, they have to borrow more (producing new bonds) to redeem the Trust Fund's bonds. If the Treasury is not authorized to borrow more, then they can't give the Social Security Administration cash for their bonds.

[displacedtexan]

8. Invoke the 'Saint Ronnie 18 Debt Ceiling Raises" rule & let the Repukes choke on it.

The Repukes threaten to withhold SS checks at their own peril.

[Faryn Balyncd]

10. That sounds like the rationale that would be used. . .

. . . That rationale, however, would use the debt ceiling go beyond prohibiting an increase in debt... What you describe (paying off debt to the Trust Fund by issuing a corresponding amount of bonds to other bond-holders) would not increase debt, because Treasury debt to the Trust Fund would be reduced by the same amount of new bonded debt).

(The ultimate obligations, of course, are to those whose contributions over the years funded their benefits, and these obligations would be correspondingly reduced by the Trust Fund's timely payments.)

That seems to be the fundamental problem.

Not recognizing the separate legal status of the Trust Fund undermines the case against the Republicans who desire to permanently steal the Trust Fund (In fact, they talk of this as a fait accompli, when they persist in claiming that the Trust Fund does not exist, as it has "already been spent", ignoring the bonds that are held by the Trust Fund as security for the loans made to the Treasury, and the fact that this loaning to Treasury during time of surpluses, with redemption when needed was exactly the way the system was intentionally designed.

A secondary, less fundamental, issue is the arbitrary nature of what payments and functions are considered "essential" for defense of life and property. To assume that SS payments are de facto "non essential" seems a shaky assumption.

[Recursion]

11. Trust Fund bonds are not open-market bonds and do not count against the debt ceiling

The borrowing limit applies only to bonds sold on the market, not intragovernment bonds.

You're right that, on the whole, borrowing to redeem bonds does not increase overall debt, however, the increase in annual deficit that those new bonds produce would be illegal for Treasury to incur.

[Kaleva]

14. I think you are mistaken.

A high percentage of the federal debt is made up of what one hand of the government owes the other.

[Recursion]

15. I didn't claim otherwise

But intragovernment debt is not what Congress sets a limit on, it's market borrowing.

[Auggie]

9. It's too transparent to be true Disaster Capitalism IMO n/t

[winter is coming]

13. They may try to run that play, but I don't think it's going to work. n/t