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It’s a book entry. The Treasury Instrument is “cashed” which lowers the debt. The offset is to the account used to send out the checks.
The balance in the “Trust Fund” is enough to keep Social Security going for a number of years, lowering the total debt as it is “cashed in”.
When that fund goes to zero, everyone takes an immediate reduction of benefits of approximately 25%, or Congress comes up with some other plan to make up the shortfall which could include the general fund if they want it to.By that time, the elderly may be a small enough demographic that the pols just let the 25% reduction happen, especially if they have the undocumented people turned into citizens by then.
The payroll tax holiday means the day of reckoning will come sooner rather than later.
There are many ways to solve the Social Security issue, that would probably be acceptable-Most people on Social Security either worked or had spouses who worked, and I would think have a better grip on reality than people who have been living for generations on government hand outs.
It is these other entitlement programs that are going to be tough. Some of the people on those programs seem to think that their mere existence entitles them to have someone else provide their stuff.
Likewise, a large number of politicians depend on these people to keep electing them to get that stuff. That right there is a tougher problem than Social Security JMHO.
But still where does the money actual cash come from? It’s not sitting in a bank somewhere it’s just on a ledger and it’s vapor. They have to back it with real dollars and those are from the general fund.
It’s just a ponzi scheme and we all know it. If it’s easy as just saying it’s a ledger entry then great...that’s all Bernie Madoff need to say and he’d be ok.