Social Security Trust Fund

Although politicians talk about the Social Security “trust fund,” the reality is that it is neither. There was no “trust” and there is really is no “fund.” Each Congress has spent the surpluses that were supposed to be set aside for when the baby boom generation began to retire.

Economist Kevin Hassett has found something else. The surpluses that once fed this imaginary trust fund are now gone. Due to the current recession, the fund is now negative. Payroll receipts are down because fewer people are working. Essentially, the trust fund has gone into the red about ten years ahead of schedule.

The latest government numbers confirm this. This year, it is estimated that Social Security will take in $654 billion in payroll taxes and pay out $662 billion in benefits and expenses. That is a shortfall of $8 billion.

The response from the Social Security Administration is that even though there is a shortfall, Social Security is not running a deficit. It turns out that the interest the government owes itself for borrowing (and spending) the surpluses will provide an additional revenue stream. So even though there is a shortfall, Social Security isn’t running a deficit . . . yet.

While all of this is true, some members of Congress are starting to object to this accounting sleight-of-hand. And all this does is postpone the inevitable. By the next decade, the bulk of baby boomers will have begun their retirements. The only way to have been able to fund the millions of boomer retirees, would be to have a real trust fund not a fictitious one. Each year Congress spent the money in the trust fund. And now a recession has removed any last pretense of there being money for future retirees.

I don’t think most Americans really care whether the Social Security trust fund is technically broke. They just want to know if their Social Security will be there for them. The reality is that each year, more retirees will be drawing on funds that aren’t there.

For some reason, no one in the administration will tell you the truth. I just did. I’m Kerby Anderson, and that’s my point of view.