I think the analogy would’ve been much more appropriate had Congressman Xavier Becerra pulled out one of his credit cards instead of his daughters US savings bond, but that’s just me. I’m posting the soundbite not because I think it has anything to do with the debt crisis, but to show you one more example of how Democrats will spin any lie to save one of their precious programs.
In this clip Bacerra is trying to make the point that social security is not part of the debt problem because it’s fully funded. When Brett objects that SS holds only promissory notes which eventually must be paid instead gets snarky, which seems to be every Democrat’s modus operandi. He likens the promissory notes in the Social Security trust fund to US currency and US savings bonds. Other than his condescending attitude toward Brett Baier and the audience, any monetarist will tell you there is a huge difference between currency and a debt bearing instrument.
Two quick points: debt bearing instruments such as bonds or the promissory notes held by the Social Security trust fund are not currency. They need to be redeemed first for currency, but they by themselves are not. Secondly, Congressman Becerra is right, the promissory notes held by the Social Security trust fund are very much like a savings bond except the savings bonds earn higher interest. Furthermore the savings bonds are a voluntary loan to the federal government in exchange for interest. The promissory notes held by the Social Security trust fund are involuntary loans to the federal government from the people of the United States who believed their money was actually being held in trust.
Perhaps Congressman Bacerra would’ve been better served had he pulled a credit card out of that wallet. Social Security is in trouble and Medicare more so. Here’s a link to a recent post from the sound off sister on what the trustee had to say about the program.
Last year, Medicare paid out $32.3 billion more than it collected in taxes. Based upon this report, if we leave things as they are, we will fail to meet our “promises” to seniors, whether they are currently on Medicare or not, in 2024.
On the Social Security front, the Social Security Disability Trust Fund will run out of money in 2018, and the Retirement Trust Fund will run out of money in 2038. One plan to extend the disability fund is to “divert” funds from the retirement fund and move them to the disability fund.
If nothing is done, under federal law, when all of the government IOU’s are exhausted (remember, the government spent your money as soon as it was received, and gave the trusts IOU’s), the trusts are required to pay out no more each year than they collect in taxes.