I read the CBO quotes "The interest that the bonds earn (a total of $85 billion in 2003) is credited to the trust funds." Social Security earned 85 Billion in interest from those bonds that came due. As opposed to your statement "There is no income, they got the money from the SS trust fund and replaced them with worthless supposed treasury IOU'S."
"But because that interest represents the government paying itself, it provides no net revenues to the government and has no effect on the total budget." - This means that it is a net zero effect for the entire US govt expenditures. If they sold them to china, it would be a net loss to the US govt, which is worse. This is not a paper shuffle.
"However, trust fund holdings, which are invested in Treasury bonds, are liabilities to the rest of the government (which will need to pay for the bonds when they are redeemed). Thus, such holdings are not assets of the government as a whole." - Which is exactly what I have been saying. Social Security earns income from the bonds.
"In effect, cash will be transferred from the government’s
general fund to Social Security—just as it would be after the trust funds are exhausted in the scheduled-
benefits scenario. To generate the real financial resources to support those transfers, the government will have to either run a surplus in the rest of the budget or borrow from the public." - This is econ 101 stuff. Of course the Treasury has to pay the interest due on its bonds. They would have to pay it to any entity that bought the bonds. It is the Law. That would include China and Japan who are the two single largest holders of our government Treasuries.
The point still remains that the bonds are sold to Social Security and the money goes into the US Treasury. This means that the treasury has to sell fewer bonds and TBills on the open market to countries like China and Japan who are the largest US Debt holders and pay them the interest. At least the Social Security Fund is earning interest on their money, which they otherwise would not be. It is illegal for the Social Security Amin to invest the money because of bad investments that happened in the past.
Before worrying if I read you quotes, you should read them in their entirety first, and analyze them.
Shermann
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