# Bush: There is No Trust! **URL:** \ **Category:** The BBQ Pit\ **Created:** [February 10, 2005, 3:28am UTC](https://boards.straightdope.com/t/bush-there-is-no-trust/289334 "2005-02-10T03:28:12Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Hentor\_the\_Barbarian](https://avatars.discourse-cdn.com/v4/letter/h/8edcca/32.png) [@Hentor\_the\_Barbarian](https://boards.straightdope.com/u/Hentor_the_Barbarian)\ **Post date:** [February 10, 2005, 3:28am UTC](https://boards.straightdope.com/t/bush-there-is-no-trust/289334/1 "2005-02-10T03:28:12Z")
In [this post](http://boards.straightdope.com/sdmb/showpost.php?p=5794823&postcount=1), **RTFirefly** questioned whether Bush set himself up to violate his oath vis a vis the constitution in his State of the Union speech. Several posters ridiculed the idea. Today, Bush said it again, this time more clearly: [http://www.whitehouse.gov/news/releases/2005/02/20050209-15.html](http://www.whitehouse.gov/news/releases/2005/02/20050209-15.html) > [@](#): > > Some in our country think that Social Security is a trust fund – in other words, there’s a pile of money being accumulated. That’s just simply not true. The money – payroll taxes going into the Social Security are spent. They’re spent on benefits and they’re spent on government programs. There is no trust. :eek: We’re on the ultimate pay-as-you-go system – what goes in comes out. And so, starting in 2018, what’s going in – what’s coming out is greater than what’s going in. It says we’ve got a problem. And we’d better start dealing with it now. The longer we wait, the harder it is to fix the problem. Bullshit, motherfucker! There is a goddamn trust fund, and it is in the form of bonds. Just because you spent it on tax cuts, which you propose to keep goddamn doing, doesn’t mean that it is not there. In 2018, money will be going in, because the government must pay the fund back. The surplus was built on the backs of the middle class, which includes me, motherfucker. My money is in the trust fund and you will not take it away. Defenders of Bush! What does it mean when he says “There is no trust” ? Help me out, because I will be ready to drink hot blood if this little cocksucker of a president continues EXPRESSLY SAYING that there is no trust fund. ---
**Author:** ![asterion](https://avatars.discourse-cdn.com/v4/letter/a/4da419/32.png) [@asterion](https://boards.straightdope.com/u/asterion)\ **Post date:** [February 10, 2005, 3:33am UTC](https://boards.straightdope.com/t/bush-there-is-no-trust/289334/2 "2005-02-10T03:33:04Z")
There is no trust. It’s a pile of IOUs masquerading as Treasury bonds. ---
**Author:** ![Danalan](https://avatars.discourse-cdn.com/v4/letter/d/76d3ee/32.png) [@Danalan](https://boards.straightdope.com/u/Danalan)\ **Post date:** [February 10, 2005, 3:44am UTC](https://boards.straightdope.com/t/bush-there-is-no-trust/289334/3 "2005-02-10T03:44:45Z")
IIRC, about 4 trillion of our current national debt is owed to the trust fund. Every year the government spends all the money that is deducted from citizens paychecks for Social Security, and puts another IOU on the pile. Then they spend more. Clinton’s ‘surplus’ was actually just a smaller IOU on the pile. The shrub puts bigger IOU’s in the pile, and gives the money to the rich. IMHO, the real reason for ‘Social Security Reform’ is to default on, or at least re-structure, the pile of IOU’s. The re-structure is going to cost around an extra trillion or two, but avoids the alternative: default. Defaulting on the 4 trillion is the most likely scenario – probably within the next 20 years. It’s all a big house of cards. Gonna be interesting when it crashes. ---
**Author:** ![Reeder](https://avatars.discourse-cdn.com/v4/letter/r/c6cbf5/32.png) [@Reeder](https://boards.straightdope.com/u/Reeder)\ **Post date:** [February 10, 2005, 3:48am UTC](https://boards.straightdope.com/t/bush-there-is-no-trust/289334/4 "2005-02-10T03:48:42Z")
It won’t crash! He has a mandate! ---
**Author:** ![Mr.Moto](https://avatars.discourse-cdn.com/v4/letter/m/9de0a6/32.png) [@Mr.Moto](https://boards.straightdope.com/u/Mr.Moto)\ **Post date:** [February 10, 2005, 3:49am UTC](https://boards.straightdope.com/t/bush-there-is-no-trust/289334/5 "2005-02-10T03:49:20Z")
Someone pointed the following out to me earlier today, and I think it clarifies the issue greatly. If I write an IOU to you, you now have an asset. However, I can’t write an IOU to myself and call it an asset. All it would be is a sort of reminder. What the government has done is write IOU’s from one part of it (the general fund, the Treasury) to another (the misnamed Social Security trust fund.) Ask yourself what will happen when Social Security “cashes” those bonds in. The Treasury will have to find the money to do this somewhere. The choices available to it will be borrowing, spending cuts in other programs, or higher taxes - the same outcome if there were no trust fund at all. So I’m calling bullshit on your little rant. If you want to fix the problem, you first have to own up to reality. ---
**Author:** ![asterion](https://avatars.discourse-cdn.com/v4/letter/a/4da419/32.png) [@asterion](https://boards.straightdope.com/u/asterion)\ **Post date:** [February 10, 2005, 3:54am UTC](https://boards.straightdope.com/t/bush-there-is-no-trust/289334/6 "2005-02-10T03:54:17Z")
As always, the Simpsons provide the perfect example: “Dear Homer. IOU one emergency donut. Signed, Homer.” “Bastard! He’s always one step ahead!” ---
**Author:** ![Hentor\_the\_Barbarian](https://avatars.discourse-cdn.com/v4/letter/h/8edcca/32.png) [@Hentor\_the\_Barbarian](https://boards.straightdope.com/u/Hentor_the_Barbarian)\ **Post date:** [February 10, 2005, 4:04am UTC](https://boards.straightdope.com/t/bush-there-is-no-trust/289334/7 "2005-02-10T04:04:43Z")
Someone did you a disservice, **Mr. Moto**. Please educate yourself by using resources better than “someone.” I’m calling bullshit on your bullshit. The treasury bonds in the trust fund are not simply IOU’s. The taxes deducted from paychecks up to $87,000 to build the trust fund are not simply exchangeable with other revenue streams within the government. They were expressly generated for the purposes of the Social Security system, and cannot be defaulted on. I’m surprised at your ignorance on the issue, and I suggest that “someone” is a dumbass motherfucker. ---
**Author:** ![Mr.Moto](https://avatars.discourse-cdn.com/v4/letter/m/9de0a6/32.png) [@Mr.Moto](https://boards.straightdope.com/u/Mr.Moto)\ **Post date:** [February 10, 2005, 4:13am UTC](https://boards.straightdope.com/t/bush-there-is-no-trust/289334/8 "2005-02-10T04:13:31Z")
What the hell is a treasury bond, **Hentor**? It’s money given to the government to spend now, and a promise that they’ll pay it off later. And that money has been spent, believe you me. The money became interchangeable with other revenue streams, for the purposes of the general fund, when it was spent on a bond. The assets in the “trust fund” can’t be spent, strictly speaking. Can you spend a savings bond directly? McDonalds won’t take them. You can redeem a bond, at which time the government will take money out of the treasury to pay you off. When the government has to do this to itself, it becomes clear that all this was an accounting fiction all of the time. You folks wanted heads to roll when Enron did this. Why you accept it from the government is beyond me. ---
**Author:** ![Scylla](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@Scylla](https://boards.straightdope.com/u/Scylla)\ **Post date:** [February 10, 2005, 4:24am UTC](https://boards.straightdope.com/t/bush-there-is-no-trust/289334/9 "2005-02-10T04:24:23Z")
My long reply got eaten by the Hamsters. Here’s the short version: 6.2% of your paycheck is sent to the government up to a maximum. This money goes into the government’s General Fund and is spent. At the same moment an entry is made into the journals of the four Social Security Trust Funds. Since the actual current dollars have been spent these are hypothetical dollars. These hypothetical dollars are then invested in hypothetical treasury instruments specially designed for SS. These dollars than earn hypothetical interest. From time to time the trustees report on how much money there would be in the hypothetical accounts if they actually existed. When money is paid out in terms of benefits another entry is made into the appropriate trust fund ledger and the hypothetical balance is reduced by that amount. The actual dollars are paid from the General Fund. ---
**Author:** ![Scylla](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@Scylla](https://boards.straightdope.com/u/Scylla)\ **Post date:** [February 10, 2005, 4:31am UTC](https://boards.straightdope.com/t/bush-there-is-no-trust/289334/10 "2005-02-10T04:31:25Z")
Continuing… To give you an example of what is occuring, consider the following: Each week you give me $50 to invest. I take the money, buy beer and drink it. However, I note down how much you gave me. I also invent some imaginary investments and imagine how much interest they would give you if they actually existed and I invested your money in them instead of buying beer. I note down this number as well. My plan is as follows. At some point down the road you will wonder how your investments are doing. I will show you the piece of paper and you will go away and not bother me. Even further down the road, you may want some or all of your money as well as the imaginary interest you earned. Fortunately for me, I plan on getting a lot of other people to give me money, too. I can only buy so much beer, so there will be enough extra to pay you off. This kind of financial structure is called a pyramid scheme or a ponzi scheme. It is highly illegal and unethical if you or I were to do it. They are illegal and unethical bebause they must eventually become top heavy and fail. Their assets are imaginary. ---
**Author:** ![Squink](https://avatars.discourse-cdn.com/v4/letter/s/b5e925/32.png) [@Squink](https://boards.straightdope.com/u/Squink)\ **Post date:** [February 10, 2005, 4:38am UTC](https://boards.straightdope.com/t/bush-there-is-no-trust/289334/11 "2005-02-10T04:38:35Z")
> [@](#): > > To make sure the retirement savings of America’s seniors are not diverted in any other program, my budget protects all $2.6 trillion of the Social Security surplus for Social Security, and for Social Security alone. (Applause.) [Bush’s State of the Union, 2001](http://www.whitehouse.gov/news/releases/2001/02/20010228.html) ---
**Author:** ![Scylla](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@Scylla](https://boards.straightdope.com/u/Scylla)\ **Post date:** [February 10, 2005, 4:41am UTC](https://boards.straightdope.com/t/bush-there-is-no-trust/289334/12 "2005-02-10T04:41:06Z")
Continuing… There is however, a rationale that explains why the government can and should do this and why it is totally normal. The first part is… Well… because they are the government and they are doing it for our own good. The second part sounds flaky but actually makes sense. **ALL** US dollars and US dollar obligations are fiat money. In other words, all moneys are imaginary. A tick in an accounting book of a hypothetical account is every bit as good as an actual dollar in your hand, or an actual treasury. A government’s IOU to itself is every bit as a good as an IOU to a third party, cash on the barrelhead, or that sum’s value in goods or services. While this makes sense, it is not, strictly speaking, true. If it were true, than there would be no reason why the government could not be spending these hypothetical dollars it needs and putting the actual dollars in an actual fund, in actual securities, earning actual interest. Instead, the government is spending the actual dollars. The reason for this is inflation. If the government just prints and spends money without regard to the actual circulation of goods and services, than there are relatively too many dollars chasing too few goods and services and we have significant inflation. If the government just prints money, than it becomes worthless. The amount in circulation must be actively managed to reflect marketable goods and services and provide a fungible currency. ---
**Author:** ![Scylla](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@Scylla](https://boards.straightdope.com/u/Scylla)\ **Post date:** [February 10, 2005, 4:50am UTC](https://boards.straightdope.com/t/bush-there-is-no-trust/289334/13 "2005-02-10T04:50:58Z")
Continuing… What the Government hopes to do is one or more of several things: A. They hope that government receipts will increase to help them pay the SS obligation out of the general fund as it becomes due and payable. B. They hope to convert this money into actual securities at favorable rates in a manageable fashion C. They will print more money that will be worth less due to inflation and fulfill the letter of the obligation D. Somewhere down the road the government will tighten it’s belt. E. In one form or another they hope to just keep floating this thing forever. Many people do not have faith in these tactics. It has become an issue because we are rapidly approaching the point in time when the outlays from the current fund as regards Social Security will be larger than what is taken in. This is the real crisis. The idea of the trust funds hypothetically hitting zero is a moot point. When outlays exceed intake that it when the actual debt is being realized. Bush’s suggestion is to begin realizing it now in the form of putting real current dollars in real investments and allowing people to diversify into the real world instead of the hypothetical one. Whether you think this is a good idea or not, hopefully you now see why Bush was quite correct in his comments about their being no actual trust fund and that the money was being spent. ---
**Author:** ![Polycarp](https://avatars.discourse-cdn.com/v4/letter/p/82dd89/32.png) [@Polycarp](https://boards.straightdope.com/u/Polycarp)\ **Post date:** [February 10, 2005, 5:08am UTC](https://boards.straightdope.com/t/bush-there-is-no-trust/289334/14 "2005-02-10T05:08:47Z")
After reading this thread, I agree, There is no trust. There is no trust which any reasonable person can put in the liar in the White House. And there is no trust which any reasonable person can put in the people on this board who think that they can magically wave away comments made by **their own party** regarding the inviolability of the supposed “Social Security lockbox” a few years back, by supposing that “it is all in the same revenue stream.” Ask **Bricker** or **Dewey** or **Hamlet** what happens when someone being paid a salary and given money to hold as a fiduciary decides to start conmingling them and spending them as if they were all his money to spend. Converted from a personal to a government metaphor, that’s precisely what the Liar and Thief in Chief is doing. And by standing up to him, you’re establishing yourselves in the eyes of all decent citizens as accomplices in his deceit and theft, too. Several of you, I had respect for before this thread and the GD one. You’re crooks in spirit, supporting a crook in public office. ---
**Author:** ![Liberal](https://avatars.discourse-cdn.com/v4/letter/l/848f3c/32.png) [@Liberal](https://boards.straightdope.com/u/Liberal)\ **Post date:** [February 10, 2005, 10:26am UTC](https://boards.straightdope.com/t/bush-there-is-no-trust/289334/15 "2005-02-10T10:26:23Z")
> [@Poly](#): > > Converted from a personal to a government metaphor, that’s precisely what the Liar and Thief in Chief is doing. You forgot Thug and Tyrant. ---
**Author:** ![Princhester](https://avatars.discourse-cdn.com/v4/letter/p/3e96dc/32.png) [@Princhester](https://boards.straightdope.com/u/Princhester)\ **Post date:** [February 10, 2005, 11:14am UTC](https://boards.straightdope.com/t/bush-there-is-no-trust/289334/16 "2005-02-10T11:14:24Z")
> [@Mr. Moto](#): > > If I write an IOU to you, you now have an asset. However, I can’t write an IOU to myself and call it an asset. All it would be is a sort of reminder. You and your “someone” have ab-so-lutely no fuckin’ idea about trust law. None. You are missing the basic fundamental point about them. No clue. Nada. Butt out till you’ve educated yourself. Trust me, this advice is for your own good unless you _like_ looking a damn fool. ---
**Author:** ![Liberal](https://avatars.discourse-cdn.com/v4/letter/l/848f3c/32.png) [@Liberal](https://boards.straightdope.com/u/Liberal)\ **Post date:** [February 10, 2005, 11:49am UTC](https://boards.straightdope.com/t/bush-there-is-no-trust/289334/17 "2005-02-10T11:49:15Z")
I don’t know anything much about trust funds either, and so I depend on those who do. So I would like to hear comments on this exerpt from the Heritage Foundation’s [Social Security Basics](http://www.heritage.org/Research/SocialSecurity/wm143.cfm): > [@](#): > > **How the Social Security Trust Funds Differ from Real Trust Funds** > > Private sector trust funds invest in real assets ranging from stocks and bonds to mortgages and other financial instruments. Assets are held only for a specific purpose, and the fund managers are liable if the money is mismanaged. Funds are managed in order to maximize earning within a pre-agreed risk level. Investments are chosen that will provide cash at set intervals so that the trust fund can pay its obligations. > > The Social Security trust funds are very different. In the words of the Office of Management and Budget (OMB): > > “The Federal budget meaning of the term “trust” differs significantly from the private sector usage…the Federal Government owns the assets and earnings of most Federal trust funds, and it can unilaterally raise or lower future trust fund collections and payments, or change the purpose for which the collections are used. “ (Analytical Perspectives, Budget of the United States Government, Fiscal Year 2000 (Washington, D.C.: U.S. Government Printing Office, 1999), p. 335.) > > Even more important, the Social Security trust funds are only “invested” in a special type of Treasury bond that can only be issued to and redeemed by the Social Security Administration. As the Congressional Research Service noted: > > “When the government issues a bond to one of its own accounts, it hasn’t purchased anything or established a claim against another entity or person. It is simply creating a form of IOU from one of its accounts to another.” (David Koitz, “Social Security and the Federal Budget: What Does Social Security’s Being Off-Budget Mean?” Congressional Research Service, May 5, 1998.) > > As a result: > > “These [Trust Fund] balances are available to finance future benefit payments and other trust fund expenditures–but only in a bookkeeping sense. These funds are not set up to be pension funds, like the funds of private pension plans. They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury, that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures. The existence of large trust fund balances, therefore, does not, by itself, make it easier for the government to pay benefits.” [Italics added] (Analytical Perspectives, Budget of the United States Government, Fiscal Year 2000 (Washington, D.C.: U.S. Government Printing Office, 1999), p. 337.) > > In short, the Social Security trust funds are really only an accounting mechanism. They show how much the government has borrowed from Social Security (see below for details), but do not provide any way to finance future benefits. ---
**Author:** ![Princhester](https://avatars.discourse-cdn.com/v4/letter/p/3e96dc/32.png) [@Princhester](https://boards.straightdope.com/u/Princhester)\ **Post date:** [February 10, 2005, 12:29pm UTC](https://boards.straightdope.com/t/bush-there-is-no-trust/289334/18 "2005-02-10T12:29:18Z")
What it means, I suspect, Lib is that the US public have been sold a bill of goods. The govt have appropriated the language of a trust, but have not actually set one up in any meaningful sense. With an ordinary trust, I could be trustee and you could be the beneficiary of a fund of $100. That is, I would have that money, but for you. I could (assuming the trust powers are wide enough) loan that money to me (as me, not as trustee) and give (as me) myself (as trustee) an IOU. I would then have a legally enforceable right to get that $100 back off me (as me) and re-appropriate it to me (as trustee). This sort of split personality means that with trusts it is entirely possible to write an IOU (as you) to yourself (as trustee) and call it a trust asset. Further, a meaningful trust would usually have protections in place to ensure that the trustee had a duty only to invest in things that would further the interests of the trust. In this case, the government has used the language of a trust but really, there isn’t one worth a damn. Going by your cite, the government (as “trustee”) can (I assume legally) loan money without any restrictions to ensure that it is making a good investment, and without any enforceable ability to get the money back. One might be cynical and suspect that the government uses the language of trusts to give a reassuring impression (ie that it is taking social security money and putting it somewhere safe), while ensuring that it can in fact spend the money like there’s no tomorrow, which of course (for your average politician) there is not. ---
**Author:** ![Mr.Moto](https://avatars.discourse-cdn.com/v4/letter/m/9de0a6/32.png) [@Mr.Moto](https://boards.straightdope.com/u/Mr.Moto)\ **Post date:** [February 10, 2005, 1:18pm UTC](https://boards.straightdope.com/t/bush-there-is-no-trust/289334/19 "2005-02-10T13:18:29Z")
That’s pretty much what I said, isn’t it, **Princhester**? [Please note what Cecil had to say about the subject.](http://www.straightdope.com/classics/a5_027.html) ---
**Author:** ![Mr.Moto](https://avatars.discourse-cdn.com/v4/letter/m/9de0a6/32.png) [@Mr.Moto](https://boards.straightdope.com/u/Mr.Moto)\ **Post date:** [February 10, 2005, 1:21pm UTC](https://boards.straightdope.com/t/bush-there-is-no-trust/289334/20 "2005-02-10T13:21:47Z")
Also please note, **Polycarp** , that the Straight Dope article linked above is from 1994. This state of affairs long predates the Bush Administration. [Next page](https://boards.straightdope.com/t/bush-there-is-no-trust/289334.md?page=2)