Turning to the Social Security trust funds in order to support Social Security, the factor that’s supposed to sustain the system until 2042, means that you will be paying a new tax, a tax that amounts to being double taxed. You will still be paying the payroll taxes that you pay today and you will also be paying to redeem the bogus bonds in the trust funds, bonds that are there because you paid surplus payroll taxes in the past.
This is not a distant problem. It’s already happening with the Federal Disability Insurance trust fund that was drawn down six of the twelve months of fiscal 2004.
“Trust Fund balances are available to finance future benefits…but only in a bookkeeping sense…they do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes or borrowing.” President Bill Clinton in his Analytical Perspectives section of the fiscal 2000 budget.
“We have no positive assets in the Social Security Trust Fund.” Secretary of the Treasury, and one of the trustees, Paul O’Neill, June 19, 2001, at a luncheon speech to the Coalition for American Financial Security in the Sky Room of the World Trade Center and later to Sam Donaldson on This Week, Sunday, June 25, 2001.
“It holds no real assets. Consequently, it does not generate funds to pay future benefits. These so-called trust fund ‘assets’ simply reflect the accumulated sum of funds transferred from Social Security over the years to finance other government operations.” June O’Neill, former Director of the Congressional Budget Office (CBO) at the CATO Institute’s Conference for Women and Social Security.
“Government trust funds do not correspond in any meaningful way to those in the private sector. Government trust funds are simply a form of earmarking, accounting mechanisms that record tax receipts, user fees, and other credits and associated expenditures,” Barry Anderson of the Congressional Budget Office in testimony before the House Budget Committee, September, 2002.
“Currently, the Social Security system is running a surplus, taking in more in taxes than it spends on benefits. That surplus is used to purchase government bonds — the only purpose to which it can be put. The purchase of those bonds generates general revenue for the federal government and that money is spent on the operations of the federal government. That is a bad system, but it is how the trust fund was designed to work. The fund does not hold cash, never has held cash, and was not designed to hold cash. Michael Tanner-CATO Institute 10-16-99 “Pointless Debate Over SS Trust Fund”
“It is in this role as a savings account that the Trust Fund could fail. It cannot work because it holds no independent assets. Though the Trust Fund is backed by government securities, these have a different meaning than they would for you or me. If I hold a government bond, I have an asset that the government will give me money for or that I can sell at any time. If the government holds a bond, however, its obligation to give itself money is meaningless. The government cannot make these bonds good, as needed in 2014, except by borrowing, reducing other expenditures or taxing citizens.” House Budget Committee Chairman Nick Smith 6-8-99
“In fact, the money the government has supposedly been putting aside from the Baby Boomers’ Social Security taxes is not there. The government has been borrowing the money to pay for the budget deficit. The Social Security Trust Fund is simply IOUs from the U.S. Treasury…. [Social Security] would be fine if the government would stop borrowing the money.”Newt Gingrich 4-7-95
Where are these voices today?
Does anyone even bother to ask why the Social Security trust funds are 22 percent of the national debt, 53 percent of Intragovernmental Holdings? Debt is debt. It’s not an asset. Debt cannot be used to pay for anything.
“Published originally at EtherZone.com : republication allowed with this notice and hyperlink intact.”