Sunday, July 24, 2011

Social Security Trust Fund Theft

When the Social Security Act of 1935 was first created by the government, it was a well intended program. When you have politicians involved, even the best intentions often have disastrous consequences. From the beginning, social security took monthly contributions-taxes- and paid the recipients. By law, any excess revenues must be placed in special-issue, non-marketable Treasury bonds. Essentially, that is the federal government loaning itself money. The Treasury bonds go into Social Security and the actual money is spent in the general budget.

It is true that by being in the form of bonds, these assets-I use that word loosely- do gain interest, most often less than 2%. What even the most educated fail to tell you,  this is not truly an asset, but a debt. By turning those excess dollars into treasury bonds, the government can take Social Security funds and spend them any place they wish.

Over decades the Social Security trust has been shuffled around. For the sake of space, time, and understanding, I will reduce the movements to simply these: