What happens to the Social Security surplus if the debt ceiling isn't raised?

[lumberjack_jeff]

The SS administration is legally limited to buying government bonds with taxes excess to retirees current needs. If the government is prohibited from selling additional debt, what happens to that money?

[Statistical]

1. It justs sits as cash in SSA bank accounts.

SSA does maintain couple hundred million or so as cash to balance current year projected expenses.

It simply projects what $$ won't be needed in the current year and purchases bonds with them.

[GeorgeGist]

2. Anti-Social Insecurity ...

would be my guess.

[customerserviceguy]

3. I hadn't heard

that Social Security was taking in more money than it was pouring out. I seem to recall about a year ago or so, the flow really started going the other way. Combine the Great Recession with the imminent retirement of the baby boomers, and we won't see that flow going the other way unless taxes are raised.

[mikehiggins]

4. despite bachmann

SocSec is in good shape. There appears to have been a shortage in funds going in because of, you guessed it, huge unemployment. That will be remedied, one way or another, fairly soon.

As for the SocSec surplus which invested in Federal Notes (not I.O.U.'s scrawled on the back of a brown paper bag like the GOPukes claim) if the US reneges on its bonds SocSec will be the least of our problems. The landlord, China, might dictate severe economic reforms if that happens and what are we going to do?

Seriously, the only problem SocSec faces is the ease with which the lies about it are spread and repeated as if they were the truth. Unfortunately, there are just as many Dems singing in the chorus as GOPukes. Go figure.

[customerserviceguy]

5. There's only one thing that might bail SS out

and that's inflation. I expect raises in the wage base to cover the coming middle class income levels, which will not really be inflated, as the cost of everything's going to go up to meet them. It's what happened in the late 1970's, the smart people saw that the old wage bases were going to be exceeded by middle and working class people, and raised them accordingly.

My prediction: A year from now, older folks won't be bitching that they didn't get a COLA, they'll be griping that it's not enough to cover inflation that will rage on after the COLA is determined a few months in advance of the end of 2011.