Quote from Ed Breen:
You give me a casual observation that you notice that sometimes agencies can sue the government and then you assert, incorrectly that SS can sue the government as a 'creditor.' Obviously you don't understand the law or anything that I have been talking about. What is this that you don't write anything specific, you don't cite to any case where the SS has sued the Gov't as a creditor or on the basis of a 'Special Government Security.' You don't even explain how such a 'default' of that faux security would occur and why and who would have standing to bring an action, and you demand that I 'prove' it? You have not even identified what 'it is.' It seems to me that you have burden of proof.
Yes, agencies sometime sue the government...so what?
What does that have to do with the distinction between a 'Treasury' and a 'Special Governmental Security'?
The difference is that the Treasury holder can sue as a 'creditor.' The cause of action will arise under contract law and the action will be a default under the Treasury Security contract.
No such cause of action can arise with regard to a 'Special Governmental Security,' because it is not a contract, it is an intergovernmental accounting entry that keeps track of what one part of the government owes to the other.
A suit from the Social Security would have to arise under administrative law or statute, and not under contract. The cause of action would arise with regard to the benefit, and only those denied a benefit under the then existing statutory scheme would have standing to bring a suit. The Trustees of the SS Trust Fund would not be able to bring suit against the Treasury under a contract ('Creditor') cause of action because there is no contract.
In addition it is not likely that any direct default under the political promise that is a 'Special Government Security' would ever take place. Because the Treasury can change the terms of the securities at will they will simply make changes, that under a contract would themselves be events of default, but that Treasury has license to do with these faux securities because the legislation allows them to. In addition the Congress will change the benefit structure so that there will be no 'benefit' default that will be actionable....they will simply reduce the benefits and change the term of the faux securities so that there is no 'default'. That is why I say the remedy is political.
Another thing you need to understand is that there is no current problem with performing SS benefits. There is enough revenue coming in every day to make current benefit payments. There is no direct reason why SS payments would not continue under a Debt Ceiling Impasse. In fact, the current procedure of the Treasury is to first pay current benefits with current SS revenue and then only apply the surplus to other government spending. The decision to stop paying SS benefits even when they are currently self funding, is a political decision that could lead to legal action...but not as a creditor...it would arise as default under the SS legislation as a failure to pay a benefit when due under the current law...it will not be a 'creditor' claim
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