Who is going to be paying the taxes needed to pay off those bonds?

Ideally the same people whose taxes Reagan lowered https://upload.wikimedia.org/wikipedia/commons/8/8c/Historic...

It's often overlooked that the deal Reagan made to get the lower tax rates was to eliminate all kinds of investment tax shelters. I.e. few were actually paying those rates, the rates were more for show and are not comparable to the tax system today.

There are ways besides cutting their rates, to deal with people who refuse to pay their taxes. Hangings, imprisonment, seizure of property...

And what a surprise - rates today are much lower, yet tax evasion continues to be a problem.

Do they not count as "our children" if they're rich?

A little off topic but if you were well into that top marginal bracket at the time I bet that drop from 90% to 70% felt really good.

Almost nobody was actually paying that rate; those high marginal tax rates only benefited the accountants who could figure out how not to pay, and the politicians who could show how how much money they were pretending to take from the rich.

No one need pay taxes to pay off the bonds. The Fed can buy the bonds and hold them in perpetuity.

>The Fed can buy the bonds and hold them in perpetuity.

And what cash will they give to the SSA in exchange for those bonds? Where will that come from?

> Where will that come from?

The same place cash comes from now when the Fed buys t-bonds in order to manipulate the interest rate: nowhere. The Federal Reserve has the authority to create money to redeem any US government security.

I don't think that is right.

The federal reserve can create new US dollars, and it can buy US Treasuries - but this is not the same as redeeming them. The fed becomes just another bondholder that needs paying by the treasury dept. The money goes to the person who previously held the bond as payment for the bond.

Also there is about $20 trillion outstanding public debt, and only $3.3 trillion in the whole money supply, so there is a big gap in money creation needed to pay off the debt. Would tank the currency and kill the economy (think hyperinflation).

https://www.treasurydirect.gov/NP/debt/current

http://www.tradingeconomics.com/united-states/money-supply-m...

> The fed becomes just another bondholder that needs paying by the treasury dept.

The Fed does not get paid. It doesn't need to get paid, since the Federal Reserve by law has infinite liquidity.

all bondholders are paid - it doesn't matter who owns the bond.

https://www.quora.com/What-happens-to-all-the-bonds-that-the...

>The Federal Reserve has the authority to create money to redeem any US government security.

We're all aware. Whether the money is taken from the next generation or from the federal reserve is irrelevant. The point is that it's not yours until the government takes it from them and gives it to you.