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What Happened to the $2.6 Trillion Social Security Trust Fund? (Madoff would be proud)
Forbes.com ^ | July13 ,2011 | Merrill Matthews

Posted on 07/14/2011 12:43:38 PM PDT by Hojczyk

Well, either Obama and Geithner are lying to us now, or they and all defenders of the Social Security status quo have been lying to us for decades. It must be one or the other.

Here’s why: Social Security has a trust fund, and that trust fund is supposed to have $2.6 trillion in it, according to the Social Security trustees. If there are real assets in the trust fund, then Social Security can mail the checks, regardless of what Congress does about the debt limit.

President Obama’s budget director, Jack Lew, explained all this last February in USA Today:

“Social Security benefits are entirely self-financing. They are paid for with payroll taxes collected from workers and their employers throughout their careers. These taxes are placed in a trust fund dedicated to paying benefits owed to current and future beneficiaries. … Even though Social Security began collecting less in taxes than it paid in benefits in 2010, the trust fund will continue to accrue interest and grow until 2025, and will have adequate resources to pay full benefits for the next 26 years.”

Notice that Lew said nothing about raising the debt ceiling, which was already looming, and it shouldn’t matter anyway because Social Security is “entirely self-financing” and off budget. What could be clearer?

Unconvinced, syndicated columnist Charles Krauthammer wrote a subsequent column questioning Lew’s assertions. “This [Lew’s] claim is a breathtaking fraud. The pretense is that a flush trust fund will pay retirees for the next 26 years. Lovely, except for one thing: The Social Security trust fund is a fiction. … In other words, the Social Security trust fund contains—nothing.”

(Excerpt) Read more at blogs.forbes.com ...


TOPICS: Business/Economy; Crime/Corruption; Editorial; Extended News; Government; News/Current Events
KEYWORDS: congress; corruption; govermentabuse; krauthammer; rinofreeamerica; socialsecurity; ss; sstrustfund; taxes; teaparty; tyranny
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1 posted on 07/14/2011 12:43:41 PM PDT by Hojczyk
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To: Hojczyk

Acutally, it never got into a ‘fund’. It was spent on receipt along with the rest of the money in the general fund we didn’t have and couldn’t afford......


2 posted on 07/14/2011 12:46:50 PM PDT by Gaffer
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To: Hojczyk
"(Madoff would be proud)"

Proud? I don't know about that. Jealous is maybe more like it!
3 posted on 07/14/2011 12:47:11 PM PDT by Kartographer (".. we mutually pledge to each other our lives, our fortunes, and our sacred honor.")
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To: Hojczyk

Ask Al Gore.

Doesn’t he have a “lock box” under his bed?

I’ll bet that’s where it is!


4 posted on 07/14/2011 12:50:01 PM PDT by Tigerized
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To: Hojczyk
what an awesome point. why isnt anyone screaming it back at the President?

WHAT HAVE YOU DONE WITH THE TRUST FUND? WHERE ARE THE PAYROLL TAXES GOING?

5 posted on 07/14/2011 12:51:16 PM PDT by beebuster2000
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To: Hojczyk
....Jack Lew, explained all this last February in USA Today:

Usually, people with one foot outside the door will lie convincingly and confidently. They know that while words they speak are a lie, they will not matter because they will be gone....

Here's where all Obama's financial team, who have conveniently quit or about to quit, differ from him. Obama is a committed liar just like Slick Willie. He will stay with it until the end, and even in the face of an electoral defeat in 2012, will make Mohamar Gaddaffi look like a fair loser.

6 posted on 07/14/2011 12:51:16 PM PDT by Gaffer
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To: Hojczyk
The "Trust Fund" was spent long ago by the Democrats.

They left their IOUs; which are worthless.


7 posted on 07/14/2011 12:52:16 PM PDT by Uri’el-2012 (Psalm 119:174 I long for Your salvation, YHvH, Your law is my delight.)
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To: Hojczyk

“What Happened to the $2.6 Trillion Social Security Trust Fund?”

Ask all the politicians who used it to bribe voters.


8 posted on 07/14/2011 12:53:51 PM PDT by SMARTY (A claim for equality of material position can be met only by a government with totalitarian powers.)
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To: Hojczyk
calling such a reform, in Al Gore’s words, a “risky scheme.”

Al Gore wrong again. It's looking more and more like the non-reform is the risky scheme.

9 posted on 07/14/2011 12:54:59 PM PDT by MulberryDraw ( Where's the democrat budget? What's the plan?)
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To: UriĀ’el-2012

Oh, you’re just getting all “wee wee’d” up over the biggest Ponzi Scheme in history. Take the Blue Pill.
Wiat a second I got a statement from my Social Security nest egg. Isn’t that Mail Fraud?


10 posted on 07/14/2011 12:56:14 PM PDT by massgopguy (I owe everything to George Bailey)
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To: Gaffer

that is a fact.


11 posted on 07/14/2011 12:56:59 PM PDT by RC one (DO NOT RAISE THE DEBT LIMIT!)
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To: UriĀ’el-2012

Like Harry and Lloyd in “Dumb and Dumber” when they spent the suitcase full of cash and in turn filled the suitcase with a bunch of IOUs?


12 posted on 07/14/2011 12:57:22 PM PDT by Jack Hydrazine (It's the end of the world as we know it and I feel fine!)
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To: Hojczyk

The trust fund was stolen by democrats before JFK was martyred by the democrats..
The only ones believing in a SS trust fund are..
Gloria, Meathead, Archie and Edith... in the defunct sitcom..


13 posted on 07/14/2011 12:59:03 PM PDT by hosepipe (This propaganda has been edited to include some fully orbed hyperbole...)
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To: UriĀ’el-2012
The "Trust Fund" was spent long ago by the Democrats. They left their IOUs; which are worthless.

Yes the IOUs are worthless, because they can only be met from new revenues--taxes or borrowing. But, let's be honest--Obama is the worst, but Bush wasn't particularly careful with finances, either. Both parties thought they could benefit by promising more than the economy could deliver.

14 posted on 07/14/2011 12:59:45 PM PDT by Pearls Before Swine
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To: Hojczyk

On the same note, I just sent this screed to a hardcore Leftist coworker:


There has been ample warning on this issue. How long a lead time for cashing non-liquid bonds is needed? we have over two weeks as of right now, and this fiasco has been brewing for a month. It’s not like the incoming revenue stream will halt outright; there may not be enough money in the coffers to pay everything, but prioritizing payment of bonds (a given) assures Social Security will remain funded. When my outgo exceeds my income, that outflow gets prioritized with debt payments first, and limited discretionary spending replaces fine dining out with beans at home; I expect the same decision-making of our Executive ... which raises question of him raising the threat of not paying basic obligations.

Ah, but that’s where I get ambushed, having the debate reframed to accusations of lying, and injection of subversive viewpoints in order to stir up emotion so that we can’t do an honest assessment. The bait will be overlooked.

   Myth #4: The Social Security Trust Fund has been raided and is full of IOUs

   Reality: Not even close to true. The Social Security Trust Fund isn’t
   full of IOUs, it’s full of U.S. Treasury Bonds. And those bonds are
   backed by the full faith and credit of the United States.

Bonds _are_ IOUs. No substantial difference save formality & interest.

We have been assured, as MoveOn insists on behalf of those in question, that Social Security is fully funded without fail (for decades at least), that it is not subject to fluctuations in income - the money WILL BE THERE. Those who assured us it would be now tell us that it won’t be. Wait, what? Cash flow understood, this gives proof to what those crazy right-wing objectors have been saying for years: Social Security funding, at least in part, is siphoned off to general revenue being routed thru the smoke-and-mirrors of bonds (aka IOUs); lacking sufficient general revenue to pay those bonds on demand, the SS trust fund reveals a suspicious absence of trust and funds.

Let’s rehash that. Money was put aside into a trust fund. That money was swapped for bonds (IOUs) so the money could be sent into the general fund (which is why bonds are issued). Time comes for cashing in those bonds (FICA income being less than SS outgo), and the Social Security Administration turns to the Treasury and says “U O I $XB”, to which the Treasury says “uh, sorry, we don’t have the money”. This is EXACTLY what conservatives have been complaining about as summarized by, as you put it, “http://www.ssa.gov/OACT/ProgData/investheld.html being an outright lie”.

There IS, and will be via ongoing revenue streams, enough money in the coffers to pay off those cashed-in bonds ... just not enough to also pay off all the other promised spending AND increase spending as much as some would like. Short of monthly income, I can either enjoy fine dining and miss a mortgage payment, or I can make the mortgage payment and eat beans for a couple weeks. Short of income, our Legislature and Executive can agree to send out NEA grants and skip sending grandma her Social Security check for a few weeks, or make sure grandma can cover her cost of living and forego funding street theater & poetry slams for a few weeks; as it is now, the Legislature wants to pay grandma, skip the frivolities for a bit, and pay down some debt, while the Executive wants to ask the bank to increase the credit line so he can take yet another cash advance on the Visa so there will be enough in checking to pay both grandma and the mimes - and ignore the increased interest payment until that becomes a problem.

Hmmm...now wait a minute: what do you mean by “a lag between the request and the payout”? It’s the government transferring bytes from one of its own accounts to another, not moving truckloads of cash around. If there’s money in the coffers (electronic, remember) then it can be moved in short order - maybe not instant, but not much longer than me moving a wad of bills from the safe to my wallet. We’ve got weeks to do it; the Treasury is equipped to make multi-billion-dollar transactions overnight, so unless the coffers are empty (which proves the lie previously framed against me), “it’s not liquid” isn’t a sufficient excuse.

So: either “it’s” a lie, or our Executive is lying when he says “I cannot guarantee that those checks go out on August 3rd”. Which is it? ...and how long _does_ it take for the left hand to cash out a $1B bond to the right hand?

“Do not be one who shakes hands in pledge or puts up security for debts; if you lack the means to pay, your very bed will be snatched from under you.” Proverbs 22:26-27


15 posted on 07/14/2011 12:59:45 PM PDT by ctdonath2 ($1 meals: http://abuckaplate.blogspot.com/)
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To: Gaffer

But they claim that SS won’t run out of money for several more years. Yes, I know that their estimates only take into account that SS is now taking in more than it is paying out.


16 posted on 07/14/2011 1:02:07 PM PDT by Blood of Tyrants (Islam is the religion of Satan and Mohammed was his minion.)
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To: Hojczyk

Well truth is there is no trust fund.It was put into the general fund starting during LBJ’s administration and the “overage” has been spent every year since.”Overage” would be what those of us who aren’t getting benefits paid in.


17 posted on 07/14/2011 1:02:12 PM PDT by chris_bdba
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To: Hojczyk

I haven’t read the entire article, but it gets off to such a dumb start I just quit. Here are a few facts:

1. Over the years the SS Trust Fund did build up a $2.6 trillion surplus when SS FICA receipts exceeded what was paid out currently to SS recipients.

2. The government started spending that money in the 1960s and there is nothing in the Trust Fund but non-negotiable, promissory notes from the US government adding up to the $2.6 trillion.

3. But, here’s where the article starts off all wrong: SS monthly benefits are not paid out of the Trust Fund, but out of current month/year collections of FICA tax tax.

4. The current year collections were always adequate until 2010, when they fell $30 - 40 billion short.

5. But still, this year, SS is being paid largely out of current FICA taxes with the government making up some shortfall about like 2010.

The current year receipts are there to pay SS benefits, it’s just whether the feds use those receipts to pay SS recipients, or play games and do something else with it.


18 posted on 07/14/2011 1:03:20 PM PDT by Will88
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To: Hojczyk
Besides the trust fund, where is the money that comes out of my check every couple of weeks?

There should be money coming into Social Security every month, whenever payroll taxes are paid.

If that money is supposed to be used to fund Social Security, they can use that money for the checks next month.

19 posted on 07/14/2011 1:03:40 PM PDT by Repealthe17thAmendment (Is this field required?)
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To: chris_bdba

So there are 2 ways to raise your federal taxes by payroll deduction...


20 posted on 07/14/2011 1:05:51 PM PDT by Son House (The Economic Boom Heard Around The World => TEA Party 2012)
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To: Hojczyk

Is it just a coinsidence that wefare and food stamps started at troughly the same time that the so called fund was put into the general fund in the 1960’s? I personally don’t think so.


21 posted on 07/14/2011 1:06:55 PM PDT by chris_bdba
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To: Hojczyk
To put it simply and fairly:

The "trust fund" money has to be put somewhere. They're not going to warehouse pallets of cash, so they convert it into the most secure financial instrument in the country: Special Issue Securities. This has the side effect of converting the revenue into general-funds cash. So long as the government has power of taxation and a functioning mint, there shall be funds to repay those "bonds" as needed. Thing is now the government is self-restraining the power of taxation, has spent too much cash to pay up, and is refusing to coin money. Whither grandma's check?

22 posted on 07/14/2011 1:07:05 PM PDT by ctdonath2 ($1 meals: http://abuckaplate.blogspot.com/)
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To: Blood of Tyrants
.... account that SS is now taking in more than it is paying out.

Frankly, I'm not even sure now that this is true, either. Too many people not working. The only thing they have going for them now is the illegals paying OASD and Medicare payments (they max out their dependent deductions to avoid income taxes).

All that will come to a screeching halt when these illegals become legal by Obama edit and all their prior contributions on fake or duplicated accounts have to be reconciled and honored.....bad times are approaching, for chure....

23 posted on 07/14/2011 1:08:59 PM PDT by Gaffer
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To: Hojczyk
The reality is that the SSTF is an unfunded liability, which is why it is included in the $14.3 trillion national debt under "Intragovernmental Holdings."

The Reps should be on this like white on rice. They should ask Obama why can't SS checks go out since, as the Dems have been saying, SS does not contribute to the deficit and does not need a fix for some time. We all know why, but asking such a question will bring home the fact that we need to borrow money to pay SS benefits and Medicare as well, which receives 51% of its funding from the General Fund.

I suspect the Reps are afraid to bring this up because it is also an indictment of them. Both parties have been guilty of promoting this fiction about the SSTF and its "assets." If the public learned the real truth, they would want to throw all of the bums out.

24 posted on 07/14/2011 1:14:58 PM PDT by kabar
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To: Hojczyk

Actually, the federal government takes in enough revenue in payroll taxes (FICA) to pay about 98% of current Social Security and Medicare expenditures. So what Obama is saying is that those payroll taxes, which are supposed to be segregated from the general treasury funds and dedicated to Social Security and Medicare, are actually just being dumped into the general fund and being spent for such things as foreign aid, NEA, welfare, and all of the other liberal programs.


25 posted on 07/14/2011 1:16:37 PM PDT by CA Conservative
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To: UriĀ’el-2012
The "Trust Fund" was spent long ago by the Democrats.

EVERY administration and congress since LBJ has been spending that fabled "trust fund."

26 posted on 07/14/2011 1:16:57 PM PDT by Roccus (Obama & Holder LLP, Procurers of fine arms to the most discerning drug lords (202) 456-1414)
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To: kabar

Call your Congresscommie and ask them if there is a Trust Fund. They will say yes. Then ask if so how come there is a chance it will not be paid. My idiot said because the cuts may stop them from being able to afford to mail the checks due to the lack of funding. But assured me the money was in the Trust Fund. I said well in that case I will pay the postage...he hung up. This is not a joke. Actually happened today.


27 posted on 07/14/2011 1:19:27 PM PDT by screaminsunshine (Socialism...Easier said than done.)
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To: UriĀ’el-2012

I was cracked open by Johnson for his “War On Poverty”, “The Great Society” and other “entitlements”.


28 posted on 07/14/2011 1:20:27 PM PDT by SkyDancer (You know, they invented wheelbarrows to teach FAA inspectors to walk on their hind legs.)
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To: Blood of Tyrants
But they claim that SS won’t run out of money for several more years. Yes, I know that their estimates only take into account that SS is now taking in more than it is paying out.

SS is a pay as you go program. It has been running in the red for several years now. A few years ago, the Trustees estimated that SS would go permanently in the red starting in 2017. Now, it looks like the date has been moved up. Moreover, the deal that Obama struck on extending the Bush tax cuts for two years included a reduction of 2% of the employee's share of the 6.2% contribution. The effect is that there is even less revenue going into SS to pay for benefits meaning more of the IOUs have to be cashed in to make up the shortfall.

In essence, we are borrowing more money from SS as part of a mini stimulus. The bill that authorized this one year reduction includes a clause that the money must be paid back at some future date by the General Fund to make up for the loss of revenue into the SSTF. And Obama wants to extend that benefit for another year.

If we had any clever, unbiased reporter, he or she would be asking Obama some hard questions on his statement about the SS checks not going out. He made a major mistake in mentioning it because it means that the USG must borrow money to pay SS benefits and that the SSTF is really just filled with IOUs, not real assets. It really is Pandora's Box.

29 posted on 07/14/2011 1:26:57 PM PDT by kabar
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To: SkyDancer

Worse than that, if you take the time to visit your local SS office you will puke from what you see! The place is filled with the “Great Society” riff raft ahead of every one else to get handouts.


30 posted on 07/14/2011 1:29:42 PM PDT by tiger63
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To: Roccus

Oh SNAP!!! It has been the feeding trough for dem and reps..


31 posted on 07/14/2011 1:33:03 PM PDT by Fred (Palin/Bachmann 2012 OR Bachmann/Palin 2012......that is the ticket!!!)
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To: tiger63

Don’t think I’ll be going there. By the time I’m eligible there won’t be any money left.


32 posted on 07/14/2011 1:47:03 PM PDT by SkyDancer (You know, they invented wheelbarrows to teach FAA inspectors to walk on their hind legs.)
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To: Will88
2. The government started spending that money in the 1960s and there is nothing in the Trust Fund but non-negotiable, promissory notes from the US government adding up to the $2.6 trillion.

Not so.

Myth 4: President Roosevelt promised that the money the participants paid would be put into the independent "Trust Fund," rather than into the General operating fund, and therefore, would only be used to fund the Social Security Retirement program, and no other Government program

The idea here is basically correct. However, this statement is usually joined to a second statement to the effect that this principle was violated by subsequent Administrations. However, there has never been any change in the way the Social Security program is financed or the way that Social Security payroll taxes are used by the federal government.

The Social Security Trust Fund was created in 1939 as part of the Amendments enacted in that year. From its inception, the Trust Fund has always worked the same way. The Social Security Trust Fund has never been "put into the general fund of the government."

Most likely this myth comes from a confusion between the financing of the Social Security program and the way the Social Security Trust Fund is treated in federal budget accounting. Starting in 1969 (due to action by the Johnson Administration in 1968) the transactions to the Trust Fund were included in what is known as the "unified budget." This means that every function of the federal government is included in a single budget. This is sometimes described by saying that the Social Security Trust Funds are "on-budget." This budget treatment of the Social Security Trust Fund continued until 1990 when the Trust Funds were again taken "off-budget." This means only that they are shown as a separate account in the federal budget. But whether the Trust Funds are "on-budget" or "off-budget" is primarily a question of accounting practices--it has no affect on the actual operations of the Trust Fund itself.

3. But, here’s where the article starts off all wrong: SS monthly benefits are not paid out of the Trust Fund, but out of current month/year collections of FICA tax tax.

Actually the payroll tax revenue for SS is deposited into the SSTF, which then makes the payments. Any "surplus" is deposited into the Treasury, which issues non-market, interest bearing T-bills in the amount of the surplus and deposits them into the SSTF.

4. The current year collections were always adequate until 2010, when they fell $30 - 40 billion short.

Not so. The assets of the larger trust fund (OASI), from which retirement benefits are paid, were nearly depleted in 1982. No beneficiary was shortchanged because the Congress enacted temporary emergency legislation that permitted borrowing from other Federal trust funds and then later enacted legislation to strengthen OASI Trust Fund financing. The borrowed amounts were repaid with interest within 4 years.

If you recall, Reagan made his famous deal on SS with Tip O'Neill in 1983 that raised the retirement age for full benefits from 65 to 67, increased taxes, and forced all new employees joining the federal government to be under SS. It was supposed to make SS "solvent" for the next 75 years. It didn't work.

33 posted on 07/14/2011 1:52:56 PM PDT by kabar
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To: kabar

It is a Pandora’s Box that no politician wants to open.


34 posted on 07/14/2011 1:58:49 PM PDT by Blood of Tyrants (Islam is the religion of Satan and Mohammed was his minion.)
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To: Son House

Pretty much...they have had this slush fund to spend on whatever since 1967 (?) now those funds are needed for those people starting to retire.The can has been kicked down the road as far as it can be.We may have have had an easier time had the dems not spent a fortune since 2007 but still the piper has to be paid....It is not going to be pretty for those of us in the 50 and under crowd.


35 posted on 07/14/2011 1:59:12 PM PDT by chris_bdba
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To: CA Conservative
Actually, the federal government takes in enough revenue in payroll taxes (FICA) to pay about 98% of current Social Security and Medicare expenditures.

Not so for Medicare. The General Fund pays for 51% of all Medicare costs. Medicare Part A is funded thru the HI trust fund, which started cashing in its IOUs in 2008. By law, the General Fund pays for 75% of the Medicare Parts B and D costs. The premiums only account for 25% of the costs. In 2011 the projected expenditures for SMI (Medicare Parts B and D) will amount to $295 billion, 75% of which are paid by the General Fund. SMI costs are larger than Medicare Part A costs. The HI trust fund will run out in 2024 because of the Obamacare "fix." Prior to that the date was 2017.

36 posted on 07/14/2011 2:02:25 PM PDT by kabar
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To: UriĀ’el-2012

Isn’t the so called SS Trust Fund filled with government bonds which are replaced by more bonds as they mature? Seems like I spent the cash coming in and replaced it with money I borrowed from myself....?


37 posted on 07/14/2011 2:03:11 PM PDT by mighty atlas
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To: screaminsunshine

LOL. Besides being an idiotic answer, the vast majority of SS payments are done electronically.


38 posted on 07/14/2011 2:04:00 PM PDT by kabar
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To: ctdonath2
“So long as the government has power of taxation and a functioning mint, there shall be funds to repay Those “bonds” as needed.”

The government has created an enormous, unpayable unfunded liability for social security and medicare. When the Budget was unified by Lyndon Johnson Social Security became classic Ponzi scheme. It is fraud, pure and simple. Social Security taxes pay for current recipients and contribute to the general fund. Over $2.6 trillion that people have thought they were contributing to their retirement was spent as part of the general government expenditures.

Because total government spending is too great to be supported by the tax revenues this economy can generate the only way to fund current government expenditures is through massive borrowing(about $1.5 trillion per year every year).

This is unsustainable. When people stop buying trillions of dollars per year of our bonds the “special issue” bonds in the so called Social Security Trust Fund will be totally worthless. They are totally worthless now but people just don't realize it yet.

There is no trust. There are no funds. The money has all been spent.

It is the greatest single fraud in the history of human civilization.

39 posted on 07/14/2011 2:04:36 PM PDT by detective
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To: Hojczyk

What happened to it?
There is no ‘lockbox’ and has never been such a thing.

It was and is one huge ponzi scheme and I demand that a multitude be put in the same cell with Madoff, starting with the rotting corpse of FDR. =.=


40 posted on 07/14/2011 2:05:16 PM PDT by cranked
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To: Blood of Tyrants

You are correct sir. Both parties have been responsibile for creating these myths about SS, which is really a Ponzi scheme.


41 posted on 07/14/2011 2:07:16 PM PDT by kabar
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To: kabar
All you've said is that SS receipts go through the Trust Fund where they are either paid to SS recipients or spent on general fund programs.

Calling what is nothing but a depository account for SS receipts the TF is just another government slight-of-hand. Normally something put in a TF will be there for a significant period of time.

The residual left in the TF is nothing but the non-negotiable, promissory notes from the US government.

And, it is correct to say that current SS benefits are not paid out of any TF, even if the feds choose to call the SS depository account a TF. The TF is composed of the surplus SS receipts over the decades, which were spent and replaced with promissory notes.

What you've described very clearly is government accounting games and a misnamed depository account for SS receipts and disbursements.

42 posted on 07/14/2011 2:08:21 PM PDT by Will88
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To: detective
When people stop buying trillions of dollars per year of our bonds the “special issue” bonds in the so called Social Security Trust Fund will be totally worthless.

Not quite. The left hand, owing the right hand, will just print cash and hand that over. Hyperinflation is the eventual result of this policy.

43 posted on 07/14/2011 2:09:58 PM PDT by ctdonath2 ($1 meals: http://abuckaplate.blogspot.com/)
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To: detective
SS is a Ponzi scheme with or without the trust fund. It is unsustainable actuarily. The folks at the top of the pyramid get more out of it than those at the bottom. In 1950 there were 16 workers for every retiree; today there are 3.3; and by 2030 there will be two.

Why Social Security is a Ponzi Scheme

44 posted on 07/14/2011 2:13:37 PM PDT by kabar
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To: Hojczyk

Can we then sue the government for stealing our money all these years??


45 posted on 07/14/2011 2:16:04 PM PDT by jackv (The darkness hates the light!)
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To: Hojczyk

Government ponzi schemes are OK I guess.

To bad we cant sue the government for our money back


46 posted on 07/14/2011 2:19:09 PM PDT by Farnsworth
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To: ctdonath2
To understand what happened to the funds you have to realize that the Viet Nam war was the first war we were ever involved in that did not ask for Public Support, All of the rest were financed by War Bonds Gov Loans Etc. Lyndon Johnson, wanted to fund the “ Great Society” while funding the Viet Nam war, and there was not enough cash. One of his Democratic Cohorts, said look at that vast cash cow down in Baltimore, the S/S fund, whey don't we borrow it, and replace the money with a special Government Bond, that no one else can buy that pays 2% interest??? There in is the absolute truth as to what happened to our money. Now the Government is unable to redeem the bonds, as they are broke. So we become part of the National Debt.
47 posted on 07/14/2011 2:20:01 PM PDT by BooBoo1000 (The Mills of the Gods grind slow, but exceedingly fine.)
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To: BooBoo1000

Interesting. What form was the money stored in prior?


48 posted on 07/14/2011 2:25:28 PM PDT by ctdonath2 ($1 meals: http://abuckaplate.blogspot.com/)
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To: Will88
The residual left in the TF is nothing but the non-negotiable, promissory notes from the US government.

The non-market, interest bearing T-bills in the SSTF and other government trust funds like HI, federal pensions, etc. are included in the $14.3 trillion national debt under "Intragovernmental Holdings" as distinct from the public debt, which is about $10 trillion. Yes, the IOUs do represent an unfunded liability just like the ones in the public held debt. Both have the full faith and credit of the USG behind them. The difference is that the trust fund IOUs must be redeemed by the USG. They are not real assets in the sense that we could sell them to China or they can be transferred to another owner.

The trust funds are a vehicle to maintain the fiction of these entitlement programs. There are laws that say once you use up all of the IOUs, benefits must be cut to reflect revenue. So even if all of the IOUs in SS are exhausted, benefits would still be paid out of the revenue stream.

What you've described very clearly is government accounting games and a misnamed depository account for SS receipts and disbursements.

CBO: Trust Funds and Measures of Federal Debt

"The federal government uses several accounting mechanisms for linking earmarked receipts (money designated for a specific purpose) with corresponding expenditures; some of those mechanisms are trust funds (such as the Social Security trust funds), others are special funds (such as the fund the Department of Defense uses to finance its health care program for military retirees) or revolving funds (such as the Federal Employees Group Life Insurance fund). Although trust funds are designated as such by law, there is no substantive difference between trust funds and the other types of funds.

When trust funds and other government funds have receipts in excess of amounts needed for current expenditures, they are credited with nonmarketable Treasury debt known as government account series securities. At the end of 2009, about $4.3 trillion in such securities was outstanding, mostly credited to the Social Security trust funds. (That amount can serve as a measure of how much receipts, including interest, have exceeded outlays over time for the programs financed through those funds.) The value of the outstanding securities (that is, the debt held by government accounts) is combined with the amount of debt held by the public (described in Chapter 1) in two measures of the government’s debt: gross federal debt and debt subject to limit.

In total, the federal budget has more than 200 trust funds, although most of the money is credited to fewer than a dozen of them. Among the largest trust funds are the two for Social Security (the Old-Age and Survivors Insurance Trust Fund and the Disability Insurance [DI] Trust Fund) and the funds dedicated to Medicare’s Hospital Insurance (HI) program (also known as Part A), civil service retirement, and military retirement.

When a trust fund receives payroll taxes or other income that is not needed to pay benefits immediately, the Treasury credits the fund and uses the excess cash to reduce the amount of new federal borrowing that is needed to finance the governmentwide deficit. That is, if other tax and spending policies are unchanged, the government borrows less from the public than it would in the absence of those excess funds. The reverse is the case when revenues for a trust fund program fall short of expenses. Thus, the balances of trust funds are not a measure of resources available to pay future obligations for the respective programs; those resources will need to come from federal revenues or additional borrowing in the years those obligations are due.

49 posted on 07/14/2011 2:28:13 PM PDT by kabar
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To: kabar

Yep, it is the mother of Ponzi schemes. Tens of trillions of dollars taken from the people with the promise that it will be there when they retire, except the politicians have been using it to fund their pet projects from the very beginning and putting worthless IOUs that must be paid back by the people who the politicians stole it from in the first place.


50 posted on 07/14/2011 2:33:55 PM PDT by Blood of Tyrants (Islam is the religion of Satan and Mohammed was his minion.)
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