What’s this I hear? If the government can’t borrow more money as of Aug 2nd the President cannot guarantee Social Security checks will be issued on Aug 3rd? I thought the debt ceiling was about paying past debt obligations. More importantly, I’ve been seeing Democrats for years insisting the Social Security system is solvent. I saw one just two days ago.

Rep. Xavier Becerra, Vice Chairman of Democratic Caucus on Fox News Sunday.

>>Bret: Essentially, correct me if I’m wrong, the Social Security trust fund is a pile of IOUs from the government, that was taken from congresses past that have already borrowed that money and spent on other programs so you have to pay it back eventually is that not accurate?

>>Becerra: The best way to display this for you. do you have a wallet? Let me pull this out. Five dollar bill, right? It’s just a piece of paper but it says $5 on it. Let me show you something else. This is a $50 savings bond. My daughter got it when she was born 16 years ago. Both of these are pieces of paper. This is a treasury certificate, this is a dollar. Both of them rely on the full faith and credit of the United States to be covered. If I try to cash either one of these in it’s only because the federal government says you can count on getting paid. That is what Social Security has to the tune of $2.5 trillion. So when people say that Social Security has no money, they’re saying to you that for the last 30 some odd years politicians have been stealing the money out of social security. It’s there. Ask china.

And now today.

Obama says he cannot guarantee Social Security checks will go out on August 3

I cannot guarantee that those checks go out on August 3rd if we haven’t resolved this issue. Because there may simply not be the money in the coffers to do it.

Hello, China? Do you have a wallet?

Maynard adds: For additional information and ranting commentary, see my post, The Myth of Social Security.

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10 Comments | Leave a comment
  1. RuBegonia says:

    Paper tiger 纸老虎 …

  2. otlset says:

    Obama resorts to fear mongering to get his way. Again.

  3. dennisl59 says:

    “So when people say that Social Security has no money, they’re saying to you that for the last 30 some odd years politicians have been stealing the money out of social security…” Bingo! That’s correct, the money has gone into the ‘General Fund’ and nothing but a pile of paper IOU’s were put in their place.

    Classic Madoff Scheme.

    One more thing that ‘sticks in my craw’, can anyone honestly believe he knows how to run a Family Budget? Income vs. Expenses, Good Credit/Bad Credit. Balance a checkbook? It’s always OPM with these Politicans, isn’t it?

  4. Maynard says:

    I supposed someone should offer a technical explanation of why Becerra’s analogy is nonsense.

    The essence of his argument is that a gov’t bond and a Federal Reserve Note are both IOUs from the government. Therefore, there’s no difference between the SSTF holding one or the other, because they’re both the same.

    This is false. The Federal Reserve is actually a private entity. It can’t just print money; dollars are created based upon demand by the banking system. Dollars aren’t simply created arbitrarily.

    On the other hand, a gov’t bond is an IOU from the gov’t, and it is created arbitrarily.

    The situation is exactly parallel to your personal access to money. If you want Federal Reserve Notes, you can work more or borrow more, but you can’t print more. On the other hand, you can write an endless stream of IOUs, at least until people stop lending you money.

    So holding dollars really is saving, and spending those dollars and replacing them with IOUs isn’t saving. Rep. Becerra is either a moron or a lying sack of sh*t or both.

    Here’s another analogy for you. Let’s say you decide to set aside $10 a week for your retirement. You have a cigar box for this purpose. Every Friday when you get paid, you take a $10 bill out of your wallet and stick it in the cigar box. But when Monday rolls around, you’re always short. So you take the $10 bill out and spend it, replacing it with a note that says, “IOU $10”. When you retire, you’ve got a cigar box full of IOUs. That’s what Uncle Sugar has done to us.

    It frustrates me to lay out these simple, straightforward facts. Any fool can see that so many of our representatives have raped us and belong in jail. But it’s not going to stop, because people don’t understand what’s been done to them. They don’t understand, they won’t understand, and it’s hopeless to explain. So the nation stumbles and bleeds from self-inflicted wounds, and then we cry and wonder what went wrong.

  5. Alain41 says:

    Agree Maynard. Another point: If you have in your possession, money or a bond, then you have that amount of money or bond. If you fully apply Becerra’s analogy to Social Security (SS), then the gov’t owes you the money that you have paid in (and maybe interest on that). I’ll go along with that.

    Of course, the real point is, SS promises to pay out more than you put in. And that is the issue. So Becerra is really saying, see this 5 dollar bill, well when I use it buy something in 30 years, the business owes it to me to treat it as a 500 dollar bill (I just picked a number. I’m not implying that SS is a 100 times/30years calculation. The amount of multiplication varies per situation.)

  6. radargeek says:

    So, again out of the mouth of odummer is that SS checks will not be paid. Doesn’t talk about cutting the cost of the vast departments, agencies, and ancillary government. Not talking about cutting government, but, of course, cutting people’s money they already (and many unwilling) forced to pay in government’s ponzi scheme. Hey Dems, hows that claim you are for the little guy? Hypocrites!

  7. […] Security Trust Fund — a fund that only Al "Lockbox" Gore and Congressman Xavier Becerra (D-CA) think actually holds anything like real […]

  8. […] But I’ve long wondered about the second-ranking Democrat in the House, Steny Hoyer. Hoyer has carefully crafted a public image as a pragmatic moderate, itself a remarkable achievement given that the rest of his party’s House leadership includes Pelosi along with James “if you disapprove of Obama, you’re probably racist” Clyburn (SC) and the rabidly leftist and economically ignorant Xavier “a government bond is the same as cash” Becerra(CA). […]

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