Please stop repeating false Republican talking points!

[Yo_Mama]

37. No, he isn't.

The special obligations in the Trust Funds are not by law negotiable. They can't be sold or transferred for money. The only way the Trustees can get money to pay benefits for them is to give them to the General Fund and have the General Fund give the Trustees the money. Therefore, their entire value rests on the ability of Congress to either raise revenue by taxation or borrow revenue on the open market.

This is US Treasury Debt To the Penny:
http://www.savingsbonds.gov/NP/BPDLogin?application=np

Total debt, as of 12/16, is 10.4 trillion held by the public (US negotiable securities). Intragovernmental is another 4.66 trillion. These are the "special obligation" securities. They do not represent any independent fund or assets - they are simply a legal right to get money from the General Fund.

The total of the two as of 12/16 is nearly 15.1 trillion, which is about 100% of annual nominal US GDP. If we tried to raise cash for all the special obligations now we couldn't - the market would run away screaming. It is debt held by the public that controls whether we can keep borrowing or not.

As of 1/1/2011 Debt Held By The Public was 9.4 trillion. We have borrowed more than a trillion dollars already this year, and we are still borrowing. We only have the ability to do this for a couple more years until we have to start paying higher interest rates, at which time the whole thing cartwheels out of control.

For your information, nothing the Constitution says controls whether the US defaults on its debt or not. The US already defaulted once, on Liberty Bonds which were payable in gold dollars:
http://en.wikipedia.org/wiki/Liberty_bond#The_Default_of_the_Fourth_Liberty_Bond

The U.S. Treasury called this bond on April 15, 1934,[17] but refused to redeem the face value of the bond in gold as required by the terms of bond which read:[18]

The principal and interest hereof are payable in United States gold coin of the present standard of value.

Since the United States had devalued the dollar from $20.67 per troy ounce of gold (the 1918 standard of value) to $35 per troy ounce in the preceding year the 21 million[19] bond holders lost 139 million troy ounces of gold, or approximately 41% of the bond's principal. This was the equivalent of $2.866 billion (1918) dollars, or approximately $200 billion at the 2011 price of $1500 per troy ounce.

The legal basis for the refusal of the U.S. Treasury to redeem in gold was House Joint Resolution 192, dated June 5, 1933.[20] This resolution was later held to be unconstitutional and thrown out by the U.S. Supreme Court.[21] Chief Justice Hughes writing for the majority elaborated the precedent that Congress may not legally nullify its own contracts:

We conclude that the Joint Resolution of June 5, 1933, insofar as it attempted to override the obligation created by the bond in suit, went beyond the congressional power.
—Chief Justice Charles Evans Hughes, Perry v United States, 294 US 330 (1935), Page 294 U. S. 354

However, due to the significant restrictions placed on gold trading by Roosevelt's reforms, the Court ruled that the bond-holders' loss was unquantifiable, and that to repay them in dollars according to the 1918 standard of value would be an "unjustified enrichment".[18] The ruling therefore had little practical effect.

Bottom line - you can win the case in the SC, but the SC can't write the check. SC has already ruled that no one has any legal right to SS or DI benefits, so you can't collect that way either.

What everyone buying bonds now expects is either to sell them before the US hits the wall (they are highly liquid due to the EU problems), or that the US will not redeem those intragovernmental obligations in such as manner as to increase debt held by the public past about 95% of GDP.

We are currently borrowing well over a trillion a year.