Eric Hurshman is ABSOLUTELY right. Why is it that it is impossible to democrats to admit that the Trust Fund owns only paper assets? That if we pay the PUBLICLY OWNED debt with the budget surplus, the national debt still goes up? That most baby-boomers as Senator Bob Kerry said would like to build some wealth they can leave to their children buy investing privately-owned Social Security IRA's?
It is true that interest rates will remain very low if we start paying the publicly owned debt with the budget surplus. But what will happen in 2013 when the Federal Government will have to start buying back the bonds ownd by the Trsud Fund? It will have to get the money from somewhere. The most likely source will be issuing new Government Bonds. Then, interest rates will start to go up very significantly because of financial markets expectations of huge issuance of bonds. And this just at the time when the baby-bust will take place, with possible recession, lower stock market etc.
I don't believe that those in favor of allowing the accumulation of a very large liability toward the Trust Fund have truly thought out the consequences of this idea.
