Friday, July 22, 2011

Social Security safe from debt ceiling threat

Writing in the Wall Street Journal, Texas A&M economist Thomas Saving, a former public trustee of the social security and Medicare programs, argues that the debt ceiling is no real threat to Social Security benefits:

Last week President Obama made an alarming statement to the nation's senior citizens. He told CBS Evening News anchor Scott Pelley he couldn't guarantee that $20 billion in Social Security checks will go out on Aug. 3, the day after the government would go into default if it doesn't raise the debt ceiling. "[T]here may simply not be the money in the coffers to do it," Mr. Obama said.

This statement completely overlooks the existence of the Social Security Trust Fund. Moreover, government redemption of the bonds in that trust fund does not breach the debt ceiling.

I made some of the same points in this quick blog post for AEI, available here.

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