I just happened to read an article in The Atlantic Magazine, that happens to suggest that the US has defaulted already on bonds that were issued over 200 years ago by not paying interest on these bonds during the War of 1812.
The reason I'm bringing this up is during the debt the talk was that America has never defaulted on it's bonds (* It seems that in the last 2 years we had more financial crises then in the past 64 years).
Now I know that we have defaulted on obligations as regards to the special Social Security bonds. The Social Security trust funds bought these bonds as a way to insure the solvency of the fund and to make payouts under the formula that when I as a thirteen year old started putting money into the system, full payment at 65 years of age not 66. Changing the way payments are payed out is a form of default. I know that a majority of my fellow Americans have a hard time grasping this concept. It seems that they believe unless there is a bankruptcy proceeding, or at least nonpayment of money to private investors, or sovereign nation your not in default but we are. It's even been suggested that we double default on these bonds.
Can we payout what we promised when we started issuing these special Social Security bonds. You betcha, just don't have a cap on work tax Social Security part of FICA and if that doesn't cover the shortfall add a slight increase to the percentage of FICA Social Security taken out of the workers paycheck.
Let's not make America harder for our children and grandchildren as they grow older by taking away FDR's promise that the aged would no longer live in poverty.
*Recession, pension time bomb, The student loan bubble, fiscal cliff, debt ceiling,underwater mortgages,
Consumer credit card crises. Feel free to add other financial crises that I just can't think about now.
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