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Politics : Al Gore vs George Bush: the moderate's perspective -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (2568)	10/15/2000 9:09:49 PM
From: Hawkmoon	Read Replies (1) \| Respond to of 10042

Zeev, <pardon me if this is overexplanatory as I'm trying to make it absolutely clear for EVERYONE what I'm getting at> "....why not buy T-Bills" from existing holders... I realize we're already buying back outstanding Govt debt held by foreigners. And I'm speaking hypothetically with regard to the $1 Trillion figure and not using actual amounts of national debt as you've stated. HOWEVER, that being said... The SS system has been running a surplus for years now, above and beyond its liabilities. The surplus money has been placed in T-Bills as a future "IOU", and the cash used to fund current governmental outlays which have been in deficit (spending more than the tax revenues we're taking in.. ) Here we have a general government budget (AGAIN, using imaginary numbers for simplicity)... where the outlays, INCLUDING current SS entitlement payments, might represent $900 million. But if the government is taking in $1 Trillion, $100 Billion of that being surplus FICA tax being set aside for future SS obligations, it is placed in T-Bills. That means that the surplus $100 Billion must be used to repurchase already outstanding T-bills held by the private market. But since it can only be invested in T-bills and such instruments represent Govt debt, the debt must increase by $100 Billion to include these surplus SS funds and used to increase the size of the overall general government budget as expenditures (since we know bureaucrats race to spend every penny at the end of the FY). So back to reality, since we know the government is allegedly no longer in deficit, we have to divide general tax revenue and surplus SS FICA based revenue. So for example, when general tax revenues increase to the extent that the general budget is no longer in deficit (revenues match outlays), but we still have those surplus SS revenues accruing as issued new T-Bills and the revenue being placed into the general governmental budget (AND THUS SPENT every fiscal year)..... Well.. I hope you all understand what I'm getting at... If the government budget is balanced, the outstanding previous privately held govt debt paid off, the question is whether or not the government can actually hold its own debt. Or is this temporary surplus going to force the government to expand its outlays, essentially forcing it to spend that SS surplus as part of its general budget, placing T-Bill IOUs in its place. T-Bills, btw, that are held by private investors. (because I don't know of any actual govt reserve asset that consists of government debt held by the govt). Bottom line, any surplus money taken in by the govt above and beyond its current outlays, neccesitates expansion of govt spending and its overall size. IT MUST BE SPENT since by the very nature of how that surplus is "stored" as governmental debt in the form of T-bills. And the only reason the government sell debt is to finance deficit... Again, can the government hold its own debt or take in more revenue that it spends? Regards, Ron