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Politics : Politics for Pros- moderated -- Ignore unavailable to you. Want to Upgrade?

To: unclewest who wrote (112204)	5/2/2005 12:43:06 AM
From: TimF	Respond to of 793958

The excess SS cash was accumulating quickly. Eventually the pot became so big the pols could not resist spending it...issuing IOUs to replace it. So they did just that. There never was a large pile of cash that got spent. It was always in government IOUs from when you first stated to get major surpluses. Lots of SIers made the mistake a few years ago of thinking stock certificates are the same as cash. Many more are making a similar mistake today thinking Govt IOUs are the same as a cash based trust fund. In many ways a worse mistake. The stocks represented a real investment, they were not like cash in that they were risky but they had a chance at a large return. The government IOUs/ bonds owned by the SS fund, have no real rate of return. Whatever interest they do get is paid by the government, so as far as the governments overall fiscal picture goes the return is 0%. I believe trillions in Govt IOUs for SS are worthless. In a very real sense they are, even if the system doesn't go bankrupt. They will get paid back from the incomes tax, the net effect is the same if the government canceled the bonds and just paid the same amount from income tax. Tim