No, I understand how SS works. It is a pay as you go system. Once all the benefits are paid, any "surplus" is put into the General Fund and Treasury issues non-market, interest bearing T-bills in the amount of the surplus and deposits it into the SSTF, which has about $2.6 trillion in such instruments [read IOUs]. When SS goes into the red as it is now and will go permanently in the red in 2016, the SSTF redeems the T-bills thru the general fund. There is no doubt that the SSTF represents a debt, which is why it is held as part of the national debt under Intragovernmental Holdings rather than publicly held debt.
It is not an unfunded liability. Millions of people have, along with their employers, paid into the system. To spend the surpluses which the SS system is still generating is tantamount to thievery.
The SSTF isn't an unfunded liability per se. They are non-market T-bills that the USG must redeem. The real scam is the SSTF. We don't need it. We would be far better off having SS as a line item in the federal budget and pay benefits from total tax revenue, including payroll taxes, which are really income taxes. I spoke a few years ago to Tom Saving, a former, long term SS Trustee. He said that this was the best way to go and it would force Congress to address the real costs of the program. And then we could stop the charade of supluses.
SS, as currently structured, represents an unfunded liability of $18 trillion.
Status of the Social Security and Medicare Programs
OASI, DI, and HI Trust Fund Ratios (Assets as a percentage of annual expenditures)
Social Security and Medicare Cost as a Percentage of GDP
SS has been a cash cow for the USG and the politicians. Its "surplus" was just a cover for more tax revenue. Now SS is becoming a black hole as the USG must cover the differences between outgo and revenue. We all know that the way the politicians will "save" SS is to reduce benefits and increase taxes so they can generate more "surpluses."