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Strategies & Market Trends : Currencies and the Global Capital Markets
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To: Sam who wrote (2845)1/4/2001 1:30:00 AM
From: Don Lloyd  Read Replies (1) of 3536
 
Sam -

...It's far better to pay down the debt. I know you think it can't be done.

The reason it can't be done is that the FICA surplus that would seem to be able to pay down debt in reality just transfers the debt from the public to the SS Trust Fund where it is held in non-marketable Treasury securities. The Trust Fund certainly contains no economic assets, and its contents represent the same liability as the laws mandating future SS payments do.

socialsecurity.org

"...President Clinton's so-called Social Security reform plans focus on building up larger balances in the Social Security Trust Fund. But the President's FY 1999 Budget contained a rather inconvenient passage showing how hollow that strategy is:

"These balances are available to finance future benefit payments and other trust fund expenditures -- but only in a bookkeeping sense. . . They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures. The existence of large trust fund balances, therefore, does not, by itself, have any impact on the Government's ability to pay benefits."..."

Regards, Don
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