Reply #29: The point isn't that the government isn't obliged . . . [View All]

[MousePlayingDaffodil]

. . . to come up with the money when the time comes to redeem the bonds. The point is, at such time as revenues raised by the Social Security payroll tax are no longer sufficient to pay benefits at the levels required by current law, the government will have to find a way to raise that money. And we're talking about a lot of money.

The distinction between the Japanese and the "old folks" you mention is that the Japanese investors actually own the bonds which they will eventually seek to redeem for cash. The "old folks" in this country, however, do not themselves hold those bonds. One part of the federal government (the U.S. Treasury) owes the money to another part of the federal government (the Social Security Administration), and if Congress were to change the law so that, for instance, future benefits were substantially reduced, the Social Security Administration might never ask the U.S. Treasury to make good on the bonds.

Consider, for instance, if tomorrow Congress were to abolish the Social Security program in its entirety, thereby immediately eliminating all Social Security benefits. What "value" would the Trust Fund's bonds have then? The Trust Fund itself would no longer exist!

The so-called Social Security "crisis" is ultimately just a political battle, a matter of political will.