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kentuck

(110,950 posts)
Sat Apr 6, 2013, 01:55 PM Apr 2013

What is the difference in saying that the Social Security fund has been spent....?

...and saying that the money we borrowed from foreign countries has been spent?

If the SS fund is broke, then is not our ability to pay our foreign debts?

After all, are not both backed by US Treasury bonds? Are the bonds for the Chinese of more value than the bonds for the Social Security fund?

Can someone explain the difference for me??

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What is the difference in saying that the Social Security fund has been spent....? (Original Post) kentuck Apr 2013 OP
If we stop repaying the Chinese they might stop lending us anymore $ tularetom Apr 2013 #1
What if they were unable to borrow the SS funds? kentuck Apr 2013 #4
Don't you mean... ljm2002 Apr 2013 #7
The difference is that we took the SS money to pay the foreign debts Yo_Mama Apr 2013 #2
In other words... kentuck Apr 2013 #3
No and Yes Yo_Mama Apr 2013 #5
Precisely. n/t ljm2002 Apr 2013 #8
You have been misled by right-wing stooges cthulu2016 Apr 2013 #6
No, it's reality Yo_Mama Apr 2013 #11
Do you know how much money is paid into the SS fund each year? kentuck Apr 2013 #12
An awful lot, but less than is being paid out! Yo_Mama Apr 2013 #14
But, if we had an unemployment rate of 5% or less...? kentuck Apr 2013 #18
The deficit began much earlier than predicted Yo_Mama Apr 2013 #24
This assumes that the trust fund does not earn interest Progressive dog Apr 2013 #21
SS trustees are borrowing from the general fund? Dragonfli Apr 2013 #25
It's simple accounting. The fund has it's 2.6 trillion in assets invested in Treasury Bonds. Cleita Apr 2013 #10
The Fed is already printing masses of money Yo_Mama Apr 2013 #13
Makes me see why the poor and middle class should bear the Progressive dog Apr 2013 #22
Inflation really is a tax on the lower income brackets Yo_Mama Apr 2013 #29
Keynes didn't claim that inflation benefitted the wealthy Progressive dog Apr 2013 #30
No it isn't. Poor people tend to have negative net worth (i.e. debt). Inflation draws them closer.. JVS Apr 2013 #31
Well, yes and no Recursion Apr 2013 #35
You are right Progressive dog Apr 2013 #40
All of the cuts are decades down the road Recursion Apr 2013 #41
The cuts are not decades down the road if Progressive dog Apr 2013 #43
It's deliberate to make the stupid majority think the SS fund has been emptied. Cleita Apr 2013 #9
One of them is lying through their teeth right here in this thread Dragonfli Apr 2013 #26
Yep, I know. Cleita Apr 2013 #28
Right, but we still have to come up with the $2.6 trillion Recursion Apr 2013 #34
We, meaning the Social Security fund, doesn't have to come up with anything. Cleita Apr 2013 #36
We, meaning the taxpayers, do Recursion Apr 2013 #37
Again, we could resell those bonds to the private sector or another nation for cash. Cleita Apr 2013 #39
If you owed the money, would you have to pay it back? Progressive dog Apr 2013 #42
K&R. David Zephyr Apr 2013 #15
There's no real difference bhikkhu Apr 2013 #16
SS is not broke, it has a huge surplus. The 'broke' thing is a Republican lie and sabrina 1 Apr 2013 #17
The Congress knows it can get away with reneging on payment of social security benefits, indepat Apr 2013 #19
That's quite an assumption by any politician of either Party, I would think? kentuck Apr 2013 #20
Couldn't agree more, but considering what's in the Ryan budget and the fact that the Republican- indepat Apr 2013 #23
The President has veto power. kentuck Apr 2013 #27
The solution is obvious, AARP needs nukes. JVS Apr 2013 #32
The whole "trust fund" idea is nonsense. It hasn't been spent, but it's not important either. Recursion Apr 2013 #33
Fuck the US government. I want them to sell the US Treasury bonds and invest the Cleita Apr 2013 #38
1. Nothing. 2. No, but neither is our ability to pay SS. Nye Bevan Apr 2013 #44

tularetom

(23,664 posts)
1. If we stop repaying the Chinese they might stop lending us anymore $
Sat Apr 6, 2013, 02:02 PM
Apr 2013

If we stop repaying SS, tough. The people who are getting SS don't have anymore $ to lend.

(Of course the Chinese aren't going to stop lending us money. They need us to buy the shit they make. At least until some of the other countries get enough money to become consumers of Chinese crap. Then we really are screwn).

kentuck

(110,950 posts)
4. What if they were unable to borrow the SS funds?
Sat Apr 6, 2013, 02:17 PM
Apr 2013

What if they were in a "lock box"?? Where would they get the money to fund the government?

Yo_Mama

(8,303 posts)
2. The difference is that we took the SS money to pay the foreign debts
Sat Apr 6, 2013, 02:06 PM
Apr 2013

Sorry, but that's it in a nutshell.

The reason everyone (including the President) is going after SS now is that SS is adding to our deficit. We are now taking in less money than we are paying out, and to make it up, we have to borrow more money. So now not only do we not have the additional SS revenue to make our budget position look better, but we have to borrow even more to pay SS benefits.

Since the Fed is buying a lot of the new Treasuries, it doesn't have much of an impact on rates currently. If/when the Fed stops, the shit hits the fan.

And the economy is improving overall, so sooner or later the Fed will stop. If federal debt held by the public is too high then (somewhere between 90-100% of GDP), then all of a sudden US borrowing costs are going to go through the roof and all hell breaks loose.

If the Fed doesn't stop, then we enter a vicious cycle of inflation.

Which should explain to you why they want to change the SS benefit calculation to understate inflation! In a high inflation environment, SS real benefits would deflate quite rapidly. It would suck for those who are dependent on the benefits, but it would make foreign bondholders feel much better, and it would delay the day of reckoning for quite a while, because total debt is nominal, so it would be cutting total debt.

However, as soon as you go into fast inflation, foreign purchasers of Treasury debt will either vanish or demand very high interest rates, so that alone won't do it.

kentuck

(110,950 posts)
3. In other words...
Sat Apr 6, 2013, 02:08 PM
Apr 2013

They do not want to pay back what they borrowed from the fund? But they still want to use the SS receipts this year to pay for financing much of the government.

Yo_Mama

(8,303 posts)
5. No and Yes
Sat Apr 6, 2013, 02:18 PM
Apr 2013

There is no longer an ability to take SS receipts to fund the government, because SS is running a deficit. SS is taking money from the general fund in order to be able to send out full benefit checks.

This has been so for years.

It is absolutely true that the government does not want to pay back the money it borrowed from the fund. There was never any need to spend the money - it could have been used to buy Treasury bonds at the time, which would then be sold on the open market when it was necessary to raise money to cover the pay-go deficit. That would not change our current position in the same way, because bonds would already be issued and SS payments would not therefore change our current need to borrow.

It may seem like a slight difference but it is not. Really what happened was that SS proceeds were used to fund lower income taxes, and now that SS is no longer covering some of the deficit, we need to raise income taxes.

cthulu2016

(10,960 posts)
6. You have been misled by right-wing stooges
Sat Apr 6, 2013, 02:21 PM
Apr 2013
If federal debt held by the public is too high then (somewhere between 90-100% of GDP), then all of a sudden US borrowing costs are going to go through the roof and all hell breaks loose. If the Fed doesn't stop, then we enter a vicious cycle of inflation.


There is no empirical basis for any of that. (Except that interest rates are higher if inflation is higher, which is a 'water is wet' sort of thing that does not affect real-dollar borrowing costs.)

It is all just something right-wingers say because they want it to be true.

Yo_Mama

(8,303 posts)
11. No, it's reality
Sat Apr 6, 2013, 02:35 PM
Apr 2013
http://press.princeton.edu/titles/8973.html


The other choice, btw, is to do as Japan has down - go into persistent deflation. This is quite painful and Japan is now trying to end it. It doesn't end deficits and it is also very difficult for a nation that runs a trade deficit to do it.

Now that Japan is running a trade deficit, it is trying to become more like the US.

You can believe whatever you want to believe, but from Greece at the time of Solon to the Mississippi bubble, the result of doing as we have done has been quite consistent:
http://www.stock-market-crash.net/mississippi-bubble/
http://www.investopedia.com/ask/answers/09/mississippi-bubble.asp

You can spiral up on the debt with no pain whatsoever, but when the creditors start wanting to be repaid, the thing snowballs in a very sudden and destructive manner.

It is not some made-up thing that is causing the Fed to tell the president to do this, or that caused the Argentinian serial crashes, or that took down the Weimar republic.

The belief you have is one that, if adhered to, will destroy Progressivism in this country for several generations. Keynes did not believe what you believe. He favored swapping between government surpluses and deficits in order to balance out business cycles. He was adamantly against inflation, and he thought governments should balance their budgets over the long run.
http://independentreport.blogspot.com/2012/03/john-maynard-keynes-was-right-and-not.html


kentuck

(110,950 posts)
12. Do you know how much money is paid into the SS fund each year?
Sat Apr 6, 2013, 02:42 PM
Apr 2013

Stop us before we borrow it again!!

Of course, if the people were not paying into the fund from each paycheck, how long do you think SS checks would continue to come in the mail?

Yo_Mama

(8,303 posts)
14. An awful lot, but less than is being paid out!
Sat Apr 6, 2013, 02:48 PM
Apr 2013

All of the FICA proceeds are being paid out now for benefits, and the SS trustees are borrowing from the general fund in order to keep paying benefits.

Of course, when the SS trustees go to the general fund for money, it reduces the amounts in the Trust fund.

kentuck

(110,950 posts)
18. But, if we had an unemployment rate of 5% or less...?
Sat Apr 6, 2013, 03:11 PM
Apr 2013

Wouldn't it be in surplus? I seem to recall reading that someplace? I don't think this is a permanent situation that you describe?

Yo_Mama

(8,303 posts)
24. The deficit began much earlier than predicted
Sat Apr 6, 2013, 04:03 PM
Apr 2013

That is true. And it's true that it's because of a bad economy, which causes less people working and lower wages for those working.

But it is now projected to be permanent. This is the graph of job creation over the last year:


That's nearly at a recessionary level. Because the lack of created jobs is accumulative, this is now a structural situation.

In 2007, the projected date of OASDI exhaustion was 2041 (2042 for SS alone, 2026 for DI alone):
http://www.ssa.gov/oact/tr/TR07/II_project.html#wp105724

Last year, the projected date of OASDI exhaustion was 2033 (2035 for SS alone, 2016 for DI alone):
http://www.ssa.gov/oact/tr/2012/II_D_project.html#120039

Each year these projections get worse. However, the effect on the federal budget gains quite quickly, because the moment that DI had to start borrowing from its fund the federal government had to start borrowing, and now that SS has rolled over (it's been negative for a couple of years), the annual borrowing accumulates quite rapidly.

This article on the SSA website explains the difference. It was written in 2010, so the exhaustion date is given as 2037 instead of the new date of 2033, but the concepts are the same.
http://www.ssa.gov/policy/docs/ssb/v70n3/v70n3p111.html

Solvency refers to the exhaustion of the trust funds, after which benefits would be cut. The article gives the then-calculated rate of 76%, or predicts a 24% cut in DI and SS benefits if the two trust funds are combined.




Because we have to borrow from other debtors to redeem the funds, the amount of borrowing we will have to do is important under these proejctions: (Again, realize that this is much older chart):


The important thing is that we did not project actually borrowing to pay benefits until 2017, but we have been borrowing to pay costs since 2010 So the whole thing looks much worse now.
http://www.ssa.gov/oact/trsum/

Social Security’s expenditures exceeded non-interest income in 2010 and 2011, the first such occurrences since 1983, and the Trustees estimate that these expenditures will remain greater than non-interest income throughout the 75-year projection period. The deficit of non-interest income relative to expenditures was about $49 billion in 2010 and $45 billion in 2011, and the Trustees project that it will average about $66 billion between 2012 and 2018 before rising steeply as the economy slows after the recovery is complete and the number of beneficiaries continues to grow at a substantially faster rate than the number of covered workers.


One way of assessing the impact is to figure what percent of workers payrolls would be sufficient to cover benefits:
Under current projections, the annual cost of Social Security benefits expressed as a share of workers’ taxable earnings will grow rapidly from 11.3 percent in 2007, the last pre-recession year, to roughly 17.4 percent in 2035, and will then decline slightly before slowly increasing after 2050. Costs display a slightly different pattern when expressed as a share of GDP. Program costs equaled 4.2 percent of GDP in 2007, and the Trustees project these costs will increase gradually to 6.4 percent of GDP in 2035 before declining to about 6.1 percent of GDP by 2050 and then remaining at about that level.


What this means is that we need to increase taxes by about 1.9 or 2% of GDP per year in order to be able to sustain the programs long term. Currently, 1% of nominal GDP is about 150 billion, which is more than the 2% FICA increase this year (120 billion). Thus, if we had tried to close the estimated gap this year, it would have required a FICA tax increase of about 5% instead of 2%.

Note that the earlier you raise taxes the less you have to increase tax rates.

But of course, we could not hope to raise FICA tax rates by 5% - doing so would put the economy in a deep recession, lower employment, and lower FICA tax income to the Treasury. It would not work!

So the only way to close the gap is to tax wealthy people, but the problem is that while they do have much more income on average, they don't have the majority of national income. So to do it by just increasing income taxes on wealthy people requires raising income taxes so high that no one believes we can do it either.

Progressive dog

(6,861 posts)
21. This assumes that the trust fund does not earn interest
Sat Apr 6, 2013, 03:37 PM
Apr 2013

which by law it does. So the Trust fund continues to grow until as late as 2020.
The trustees are not borrowing from the general fund, they are cashing in bonds which they purchased from the general fund.

Dragonfli

(10,622 posts)
25. SS trustees are borrowing from the general fund?
Sat Apr 6, 2013, 04:23 PM
Apr 2013

That is a bald faced lie.

SS doesn't borrow a nickel from the general fund, all they can do BY LAW is redeem treasury bonds that they purchased in order to safely store the excess funds collected for exactly this purpose - to be redeemed as will be needed in the future. Those are backed by the full faith and credit of the US government and pretending they aren't is an implied lie to add to your remarkably bald faced lie.

The misrepresentations of the truth you have brought here are very well known right wing lies used for propaganda purposes, so why are you bringing them here?

Cleita

(75,480 posts)
10. It's simple accounting. The fund has it's 2.6 trillion in assets invested in Treasury Bonds.
Sat Apr 6, 2013, 02:34 PM
Apr 2013

Even though our country has spent the money it borrowed, which is what everyone does with borrowed money, it's their obligation is to pay back the bond money when the bonds mature. Don't let anyone tell you otherwise. There will not be a huge inflation unless the Fed goes crazy and starts printing masses of money to pay off the debts. I don't think any Treasury Secretary will do anything that foolish because it will have the result of diminishing the fortunes of those billionaires they try so hard to please.

Yo_Mama

(8,303 posts)
13. The Fed is already printing masses of money
Sat Apr 6, 2013, 02:46 PM
Apr 2013

85 billion a month, to be exact. The Fed has said it will stop when the long-run inflation expectation exceeds 2.5%.

The Fed can do what it is doing now because except for student loans and governments, the US is still generally paying DOWN debt which offsets the effect of printing that money. The money may theoretically be out there in banks, but banks can't find viable borrowers, and instead increase their reserves at the Fed. In other words, the Fed is increasing the money supply while defaults and unwillingness to borrow are cutting money supply:




When people start to borrow again - which will happen as soon as new home buyers start to exceed buyers losing homes - then this graph will reverse and an intense inflation will result:


Progressive dog

(6,861 posts)
22. Makes me see why the poor and middle class should bear the
Sat Apr 6, 2013, 03:53 PM
Apr 2013

brunt of the war spending and tax cuts for the wealthy. Yup, let's fund the government from the Social Security trust fund.

Yo_Mama

(8,303 posts)
29. Inflation really is a tax on the lower income brackets
Sat Apr 6, 2013, 05:58 PM
Apr 2013
http://www.pbs.org/wgbh/commandingheights/shared/minitext/ess_inflation.html
By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security but [also] at confidence in the equity of the existing distribution of wealth.

Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become "profiteers," who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.

Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

In the latter stages of the war all the belligerent governments practiced, from necessity or incompetence, what a Bolshevist might have done from design. Even now, when the war is over, most of them continue out of weakness the same malpractices. But further, the governments of Europe, being many of them at this moment reckless in their methods as well as weak, seek to direct on to a class known as "profiteers" the popular indignation against the more obvious consequences of their vicious methods.


We can see this happening today. All the benefit of the money-printing is going to wealthy people - all the current weight is felt by the poor and those who gain all their income by working for a wage.

A more fucked-up system I cannot imagine, unless it is to then decide to balance the books by deflating pension benefits.

Which is what the administration's proposal contains.

I am disconsolate and I do not know where to turn.

Progressive dog

(6,861 posts)
30. Keynes didn't claim that inflation benefitted the wealthy
Sun Apr 7, 2013, 04:02 PM
Apr 2013

In the very quote that you posted " As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery." Keynes makes the point that CREDITORS will be harmed by inflation. Very few wealthy would be net debtors.

JVS

(61,935 posts)
31. No it isn't. Poor people tend to have negative net worth (i.e. debt). Inflation draws them closer..
Sun Apr 7, 2013, 04:06 PM
Apr 2013

to breaking even.

Recursion

(56,582 posts)
35. Well, yes and no
Sun Apr 7, 2013, 04:48 PM
Apr 2013

Poor people include people with lots of debt (inflation helps them) and people on fixed incomes (inflation hurts them).

Progressive dog

(6,861 posts)
40. You are right
Sun Apr 7, 2013, 05:06 PM
Apr 2013

but that is why we have CPI adjustments, as long as they aren't dishonest ones like CPI-E.
The point is that government borrowing and spending would help the economy recover. This is not the right time to balance the budget and balancing it by cuts to government benefits is stupid.

Recursion

(56,582 posts)
41. All of the cuts are decades down the road
Sun Apr 7, 2013, 05:12 PM
Apr 2013

That's kind of why I'm against saying the sky is falling here; the future is likely to be so different from the present that changes we "lock in" for 40 years down the road are essentially meaningless.

Cleita

(75,480 posts)
9. It's deliberate to make the stupid majority think the SS fund has been emptied.
Sat Apr 6, 2013, 02:28 PM
Apr 2013

It's simple accounting. The 2.6 trillion in the SS fund has been invested in US Treasury bonds. It could be invested in something else. The reason a country or a company issues bonds is to raise cash. Sure it will be spent but over the period the bond matures it has to be paid back. So unless our country declares bankruptcy and defaults on those bonds, the fund has 2.6 trillion in assets. So when these conservative assholes on TV try to tell you that the fund has been spent, they know they are lying through their teeth.

Dragonfli

(10,622 posts)
26. One of them is lying through their teeth right here in this thread
Sat Apr 6, 2013, 04:33 PM
Apr 2013

Go's so far as to tell the bald faced lie usually only used by extreme libertarians "SS is borrowing money from the general fund!1111"

I don't know what it is but it is not an informed Democrat.

Recursion

(56,582 posts)
34. Right, but we still have to come up with the $2.6 trillion
Sun Apr 7, 2013, 04:46 PM
Apr 2013

I mean, the fact that those bonds exist doesn't itself generate the revenue to pay them. That's what people are worried about.

Cleita

(75,480 posts)
36. We, meaning the Social Security fund, doesn't have to come up with anything.
Sun Apr 7, 2013, 04:51 PM
Apr 2013

This is where the confusion is. The US treasury has to come up with the money it borrowed when it issued bonds. It's supposed to be paid back through tax revenues. And it isn't just the Social Security fund the US owes to, but the Chinese and anyone else who buys US Treasury bonds for an investment. Maybe the SS need to sell the bonds and invest in income generating real estate instead. Maybe then people will realize that the US government debt is not the same thing as the social security fund.

Recursion

(56,582 posts)
37. We, meaning the taxpayers, do
Sun Apr 7, 2013, 04:52 PM
Apr 2013

The money doesn't just appear at Treasury out of nowhere (well, it could if the Fed were on board, and for that matter I'm all for monetizing the trust fund that way).

Cleita

(75,480 posts)
39. Again, we could resell those bonds to the private sector or another nation for cash.
Sun Apr 7, 2013, 04:57 PM
Apr 2013

The US would still owe the debt to whoever bought them and the SS fund would have cash. Is that so hard to understand?

Progressive dog

(6,861 posts)
42. If you owed the money, would you have to pay it back?
Sun Apr 7, 2013, 05:13 PM
Apr 2013

If you held US treasury bills, should the government pay you back?
Tax rates and collections as percent of GDP are lower than almost any time since WW2. The government has room to increase it's income and it should do that before stiffing Social Security.

bhikkhu

(10,708 posts)
16. There's no real difference
Sat Apr 6, 2013, 03:06 PM
Apr 2013

and unless the government goes into default, both statements are meaningless.

I hear the "SS has been looted!" thing most often from people with an agenda towards ending social programs, or with a general sentiment towards eliminating the government. Republicans and libertarians, in other words.

sabrina 1

(62,325 posts)
17. SS is not broke, it has a huge surplus. The 'broke' thing is a Republican lie and
Sat Apr 6, 2013, 03:06 PM
Apr 2013

no Democrat should feed that lie, even by remaining silent about it.

indepat

(20,899 posts)
19. The Congress knows it can get away with reneging on payment of social security benefits,
Sat Apr 6, 2013, 03:11 PM
Apr 2013

but can't get away with reneging on public debt purchased by foreigners or others.

kentuck

(110,950 posts)
20. That's quite an assumption by any politician of either Party, I would think?
Sat Apr 6, 2013, 03:15 PM
Apr 2013

To think that American retirees get in line behind the Chinese, the Japanese, and all other debtors. They should be disabused of such thinking.

indepat

(20,899 posts)
23. Couldn't agree more, but considering what's in the Ryan budget and the fact that the Republican-
Sat Apr 6, 2013, 04:01 PM
Apr 2013

controlled House will not pass anything that doesn't promote the interests of the uber-wealthy, large corporations, and the oligarchs to the detriment of all others, I put nothing past what the Rethuglicans will or won't do.

kentuck

(110,950 posts)
27. The President has veto power.
Sat Apr 6, 2013, 04:35 PM
Apr 2013

"Don't even think of bringing that crap up here", is all he needs to say. Instead of trying to work out a deal with them.

Recursion

(56,582 posts)
33. The whole "trust fund" idea is nonsense. It hasn't been spent, but it's not important either.
Sun Apr 7, 2013, 04:45 PM
Apr 2013

It's a way for the Government to borrow to make Social Security payments in the future without adding to the net debt. (People often say "SS does not contribute to the deficit"; that's completely false -- if less were paid out, we would be borrowing less.) The point of the trust fund is that going forward we can borrow dollar for dollar to redeem those bonds without increasing the net debt.

Cleita

(75,480 posts)
38. Fuck the US government. I want them to sell the US Treasury bonds and invest the
Sun Apr 7, 2013, 04:55 PM
Apr 2013

2.6 trillion in investments outside of government bonds. AAA municipal bonds would be a good and safe investment or solid income generating real estate investments. Once people see that the US debt has nothing to do with the SS trust fund, we can end this ridiculous false equivalency.

Nye Bevan

(25,406 posts)
44. 1. Nothing. 2. No, but neither is our ability to pay SS.
Sun Apr 7, 2013, 05:25 PM
Apr 2013

3. SS is not "backed" by US Treasury bonds. Congress can reduce or eliminate SS at any time and this would not constitute a default.

4. Yes. Holding an actual Treasury bond whether you are Chinese or any other nationality) gives you a legal right to repayment, whereas Congress can reduce or eliminate any SS payment that you are anticipating.

5. The essential difference is that repayment of Treasury bonds is a legal obligation, but indexation and payment of Social Security is not.

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