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July 29, 2011

This Thing's Gettin' Real Now

OK, so now that we're on the precipice of being on the precipice, let's revisit Obama's statement about granny's social security checks possibly being cut off next week if we don't increase the debt ceiling.

First, we actually hit the debt ceiling sometime back in May, and the August 2nd "deadline" is really the day Treasury thinks it will run out of accounting gimmicks to paper it over.

Look, we all know TurboTax Timmah is creative. I'm sure he'll think of something ... that's what these people do. But granny's social security check isn't on the table. Yet.

Why, you ask? Because of the oft-maligned social security trust fund (SSTF), that's why. Now, it's true that the SSTF just holds I.O.U.'s from the government (right pocket, meet left pocket) but those IOUs are included in the debt subject to the debt ceiling.

Look here at the (PDF) Daily Treasury Statement. Scroll down. No, further.

Stop! Table III-C "Debt Subject To Limit" ... see that $9.7 trillion (mf'ing dollars ... how did we get to this place?) of debt held by the public? Well that's way less than the $14.3 trillion statutory debt limit at the bottom, right? The big difference is that thing called "Intergovernmental Holdings" ... $4.5 trillion, give or take.

Guess what's in there. Granny's damned social security check, that's what! (among other things).

The SSTF (just from memory) is roughly $2.5 trillion of the balance of Intergovernmental Holdings. So when Douglas Holtz-Eakin is absorbing all "mandatory spending" in current income, that's not exactly right. We can issue $4.5 trillion more of treasuries (presuming someone will buy them) and not broach the debt ceiling to service payments from these funds, including (again, IIRC) $2.5 trillion of social security payments.

So don't worry, oldsters. You'll continue to get paid and I'll continue to pay into the Ponzi scheme while we work this little impasse out. You can thank me later, but you should apologize to your grandkids in the same breath.

More, courtesy of the WaPo:

Older Americans do not intend to ruin America, but as a group, that’s what they’re about. On average, the federal government supports each American 65 and over by about $26,000 a year (about $14,000 through Social Security, $12,000 through Medicare). At 65, the average American will live almost 20 more years. Should these sizable annual subsidies begin later and be less for some? It’s hard to discuss the budget realistically if you ignore most of what the budget does.

Welcome to your health and welfare benefit plan with an army, folks. For as long as it can afford the army, anyway.

(Consider this the DOOM! post. Monty doesn't do DOOM! on Fridays, but DOOM! doesn't hew to a schedule)

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posted by Andy at 09:12 AM

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