What does it mean “the only way to redeem the bonds is to raise taxes?” Is there no money to repay the T-bills?
(The “surplus” is NOT invested in T-bills) The Social Security assets, ($655.5 billion at the end of 1997) are currently invested in government securities backed by the full faith and credit of the U.S. Government. These investments are required under law to have maturities fixed with due regard to the needs of the Social Security trust funds. When the investments reach their maturity date, the federal government must pay them off. It can do this, as it does with other privately held securities, by reducing costs in the government budget, financing the obligation with new borrowing, or raising taxes. The government borrowed the Social Security funds for other governmental spending, just as it does with private borrowing. The fact that the government owes Social Security these funds is due to government spending, not to Social Security indebtedness.
