is not the Social Security's fund debt but asset. Our Treasury owes the money to the the fund not the other way around. It's simple bookkeeping. Really! In 2038 when we might get to the point of only being able to pay 80% of benefits, we still will have enough to do that. Now if we lifted the cap and made the more affluent among us pay more of their share of the burden, it will be fine and fully funded up until the next century.

...I'd happily see it eliminated to secure SS for the future.

I know that SS is completely solvent as is for the next 20+ years, but

...I think it's reasonable to eliminate that cap to ensure SS long-term viability.

Eliminating it entirely is less regressive than simply raising the cap.

Why should somebody making $250,000 a year get an advantage that somebody making $110,000 (or whatever the cap is this year) doesn't?

The Treasury can issue a lot of debt to the SS Trust Fund. Bottomless pit.

The interest rate is variable and determined by law. But it basically stays in-house and is just added to the amount owed to the SS Trust Fund.

But while the intergovernmental SS Trust Fund debt clearly part of the national debt, it's not part of the publicly held debt. That's calculated separately. When the amount of debt offered publicly exceeds demands by buyers, you'll see interest rates on the T-bills increase. Sloppy speaking confounds "national debt" and "publicly held debt." Sloppy reporting obscures the difference. Decent research and reporting keep them separate. Politicians, speaking to the typical reporter and tv viewer, have little interest in precision, even if they were always capable of it. Such precision would be seen as pedantic and a definite turn-off.

For now, T-bill interest is very low. Part of that has been because, as the media constantly say, US debt is still safer than most other kinds of investment instruments and this is responsible for the high demand (and therefore low interest). However, the media also report on QE 3, part of which is that the Fed has purchased record amounts of T-bills in the last 4 years. This Fed purchasing of US Treasury debt has surely contributed at least a modicum to the high demand. It won't continue forever. It might not continue past September 2013.

As we accept amounts twice the usual *-era deficits as "normal" and necessarily sharply cut back on QE we'll find that we're converting intergovernmental debt into publicly held debt. That may drive up interest rates if supply exceeds demand. If there is a more general world-wide recovery and restoration of confidence that would also reduce demand and drive up interest rates. That would be a horrible thing. It would restore some longevity to the SS Trust Fund, as any rolled-over debt earned greater interest. But it would trash the discretionary fund Congress has to work with.

It is entirely possible that that last step may be more expensive than contemplated. I won't be surprised if we end up paying $3.2 or $3.3 trillion real dollars for something that should have only cost us $3 trillion real dollars.

But whatever higher interest rates we might have to pay are only a problem to the degree they are an isolated effect of processing the 3 or 4 trillion itself.

For instance, if the economy is better interest rates will surely be higher, but so will SS contributions and general govt. revenue.

And whatever degree inflation increases rates is a wash -- the same inflation will be inflating SS and other revenue.

And there should be no credit-worthiness issue, since our net indebtedness doesn't go up.

So we get down to the specific marketplace effect of the specific needs of the SS trust fund itself. And that $3-4 trillion of additional bond sales over however many years (10? 15?) shouldn't break the bank.

IMO.