True, that’s exactly what has been happening, with Social Security tax payments being “borrowed” .
The major Social Security tax increases done during the Reagan era, were supposed to put Social Security on a sound financial footing. And that plan may well have worked, except for the fact that the tax money paid into Social Security, which was supposed to be dedicated to that purpose, was drained away through this “interfund borrowing”, or whatever technical term describes taking those funds and using for other purposes.
Plus you have the creeping benefits added to SSA. Now, there are numerous additional “hogs at the SSA trough,” including illegals who have become citizens and will get SSA benefits without having to have to contribute little or nothing during their “working lives!”
The sad fact is that the Social Security system is actuarially unsound. Fixing it is going to require some combination of (1) reduction in benefits (either by reducing payments/postponing scheduled increases already built into the system, or by further postponements to the age at which one becomes eligible for payments); and/or (2) increases in taxes.
Because either option is going to make voters angry at politicians, politicians will postpone taking action as long as possible. But that in turn will make the actions that will be necessary when the day of reckoning comes even more draconian.
Reality: deal with it.
The Social Security Fun was once a upon a time a “Restricted Fund” then the democrats I believe in the Johnson era voted it to be an Unrestricted Fund. This meant Congress borrowed money from it and NEVER paid a penny back. Congress just kept passing this issue to the next Congress every year and here we are!
“The major Social Security tax increases done during the Reagan era, were supposed to put Social Security on a sound financial footing. And that plan may well have worked, except for the fact that the tax money paid into Social Security, which was supposed to be dedicated to that purpose, was drained away through this “interfund borrowing”, or whatever technical term describes taking those funds and using for other purposes.”
Social Security NEVER had any mechanism to actually INVEST social funds, in any true OUTSIDE investment. The structure had it from the beginning that any “excess” FICA tax revenue - revenue exceeding what was needed at the time to pay then current benefits - was to be put in IOUs from the treasury department. They all along called than scheme an “investment”.
If you have two sets of books for all your finances, and you take money recorded in one book, replace it with an IOU, and spend it, THAT IOU is not an “investment”.
But two accounts of the one single federal government doing that exact same thing is also not performing an investment either. ALL that does, just as it would if you did it to yourself, is move to the future a time when you will have to get new sources of money to pay back the IOUs you owe to yourself - if you want and need the accounts you stuffed them to be whole.
THE FUTURE IS NOW for social security, because earlier generations of us left in debt, not with a truly secure, OUTSIDE invested “trust fund”. Instead of cashing in bonds sold to us by corporations, we have one side the federal general ledger telling another side of the federal general ledger - “hey, I want the cash for your IOU”.
Form it’s creation in 1935 the law stated that any surplus funds would be put into the general fund and the social security trust fund would be given special interest bearing bonds. Nobody ever stole or borrowed it, it’s the way the system was set up from the beginning.