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A comment on United States loses AAA credit rating from S&P . Parent comment

Re:United States loses AAA credit rating from S&P by mbreese on Saturday August 06, 2011 @02:24AM (#2853241)
You do realize that most Treasury IOU's are also called bonds, right? There are also two trust funds that comprise social security: the old-age fund and the disability fund. They each buy special issue securities from the government, but have also bought public bonds in the past. The securities have always been paid back with interest. If the Federal gov't ever didn't pay one of these securities, it would be a default by the gov't.

It would be interesting if these funds could invest (limited amounts) in some other type of security, but for now, they are limited to Federal securities. Imagine the sway on the market a $2.7 trillion fund would have.

http://www.ssa.gov/oact/progdata/fundFAQ.html#n7

http://www.ssa.gov/oact/progdata/specialissues.html

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Re:United States loses AAA credit rating from S&P by muzz on Saturday August 06, 2011 @02:57PM (#2854612)
The bonds will be paid, but future Congresses can decide at any time to cut benefits to recipients. That's the conflict. Perhaps analogous to lending your boss a large amount of money-- he now has the incentive to cut your wages so that he can more easily pay back the loan.
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