# Is there "money" in the Social Security Trust Fund? **URL:** \ **Category:** Great Debates\ **Created:** [August 12, 2014, 7:34pm UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391 "2014-08-12T19:34:13Z")\ **Posts on this page:** 20\ **Page:** 6
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [August 14, 2014, 7:09pm UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/101 "2014-08-14T19:09:45Z")
For the bajillionth time: there is no cash in the SSTF because Federal law prohibits any cash balances in the SSTF. The SSTF consists of bonds that are constitutionally guaranteed. Therefore, the trust fund has a value of roughly $2.8 trillion despite not holding a single penny in cash. How much cash is in your investment portfolio? ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [August 14, 2014, 7:11pm UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/102 "2014-08-14T19:11:16Z")
Also, in your estimation, how much will repaying the Social Security Trust Fund raise the national debt? ---
**Author:** ![Tom\_Tildrum](https://avatars.discourse-cdn.com/v4/letter/t/e95f7d/32.png) [@Tom\_Tildrum](https://boards.straightdope.com/u/Tom_Tildrum)\ **Post date:** [August 14, 2014, 7:59pm UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/103 "2014-08-14T19:59:48Z")
> [@Ravenman](#): > > Also, in your estimation, how much will repaying the Social Security Trust Fund raise the national debt? Zero, for the reasons I explained above. Work through the steps. The SSTF can be eliminated (in a constitutionally satisfactory way), with no change to the Treasury’s balance sheet. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [August 14, 2014, 8:14pm UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/104 "2014-08-14T20:14:39Z")
> [@Fuzzy\_Dunlop](#): > > That is not entirely or substantially accurate. The social security system does have de facto access to those funding streams through its nearly $3 trillion worth of treasury bonds. It’s true that US Treasury bonds are virtually without default risk. That’s ultimately because they’re backed by the federal government’s ability to tax. If you believe the social security administration can count on its $3 trillion investment then you must also believe they’ll ultimately be paid through non-payroll taxes, like income tax. But that is money it is entitled to through its ownership of securities. The federal revenue and the SSTF are different troughs. > [@](#): > > When the trust fund is exhausted social security will need access to new income. Much sooner than that it’ll need to rely on the federal government to come up with ways to pay back the trust fund. That’ll either require more borrowing or raising non-payroll taxes. So? ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [August 14, 2014, 8:16pm UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/105 "2014-08-14T20:16:45Z")
> [@Fuzzy\_Dunlop](#): > > The one bona fide advantage I see to the trust fund is that if you’re a Democratic congressman, who wants to prolong social security, you’re slightly better off having the federal government “owe” the $3 trillion to the social security trust fund when negotiating with Republicans. > > Defaulting on our debt isn’t a realistic option, so we have to do something about it. Since it’s debt the federal government owes, they have easy access to any funding source. If the trust fund is gone and its social security itself that’s insolvent then you can only fiddle with the payroll tax. > > I admit it’s an awfully minor distinction and if you had a less adversarial congress that actually wanted to find a compromise it wouldn’t matter much at all. Economist live in a highly stylized world where everyone is rational and reasonable. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [August 14, 2014, 8:19pm UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/106 "2014-08-14T20:19:33Z")
> [@Fuzzy\_Dunlop](#): > > If I bought $3 trillion worth of government debt, would you agree I have access to about $3 trillion worth of government revenue? Most people who understand government finance would. Obviously I’m being a little poetic about my use of the idea of having access to funds, but my meaning is a lot more correct than your useless nitpicking. > > Obviously some social security clerk isn’t going to barge into congress and state they’re taking over. Its not nitpicking. You are basically saying that a creditor has acess to the revnue of its debtors so you can somehow ignore the distinction between the two. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [August 14, 2014, 8:24pm UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/107 "2014-08-14T20:24:20Z")
> [@Tom\_Tildrum](#): > > Respectfully, you’re putting too much weight on names of things, and down that road lies magic-words tax-protester thinking. Yes, the assets in the SSTF are called bonds and are constitutionally guaranteed. But that has no practical significance for bonds that the government owes to itself. The government owes that money to itself about as much as GM bonds held by the GM administered pension fund is money GM owes to itself. > [@](#): > > Congress could abrogate the SSTF in a few sentences if it chose to, completely in keeping with the Constitution: > > Thus, the bonds are retired without constitutional difficulty, the trust fund is defunded and bypassed, Treasury’s balance sheet is unaffected, and the individual citizen’s taxes and benefits stay the same. In other words, the SSTF is taken out of the system in a day’s work, and nothing changes. That’s why we’re saying that the SSTF has no financial significance. There is a difference between saying that the government CAN do soemthing and assuming that it has already done that thing. The government could collectively repeal the Constitutional provision against defaulting on the debt. the government could do a lot of things but as things stand now, that money is not fungible with the federal revenue and represents real value held by the SSTF. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [August 14, 2014, 8:28pm UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/108 "2014-08-14T20:28:32Z")
> [@Ravenman](#): > > Every one of your analogies are awful because none of them have any relation to reality. Whether it’s trying to make people thinks that a legally unenforceable IOU is the same thing as a government security backed by the full faith and credit of the United States, or this absurd scenario which doesn’t even match up with **Hellestal** ’s simplified, but generally accurate, scenarios presented earlier; every gotcha question or nonsense scenario you have presented has no more accuracy than flinging anti-government poo against a wall to see what sticks. > > I urge you to stop presenting these bizarre “the government is a ripoff” hypotheticals. Please. Even assuming that we are using government revenue on frivolous shit, the bank would still owe me the money and they would still have to pay it to me even if I didn’t have $11 to give it. ---
**Author:** ![Hellestal](https://avatars.discourse-cdn.com/v4/letter/h/3ab097/32.png) [@Hellestal](https://boards.straightdope.com/u/Hellestal)\ **Post date:** [August 14, 2014, 8:35pm UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/109 "2014-08-14T20:35:18Z")
I went to the dentist over lunch, and after I got back and (briefly) stopped procrastinating with a bit of work, it’s like I keep missing posts in this thread. It’s like posts appear out of nowhere. So if I’ve missed an important comment or you’ve already engaged some of this stuff, my apologies. > [@Ravenman](#): > > There IS a practical distinction. Only FICA funds the SS retirement program, only surpluses from FICA collections provide assets for the Trust Fund, and so on. > > You can’t just ignore the law and say it has no meaning because you can put an Excel table together on the overall government budget. The Social Security system does not have access to the funding streams available to the general government (whether from income taxes, fee collections, or excise taxes), and the general government does not have access to the FICA funding stream. You can’t simply pretend that isn’t the case because 10 plus 1 does indeed equal 11. I can point out that 10 plus 1 equals 11 when there are other people claiming it equals 10. And from my perspective, that is exactly what has been happening. > [@Ravenman](#): > > ETA: let me say this another way. If there was no practical distinction between the SS system and the rest of the government budget, there would be no need to adjust FICA or benefits when the Trust Fund runs dry. But that isn’t true, so there is a practical (as well as legal) distinction, QED. Whoooooaaaaa. That’s not what I was talking about. When you first entered this thread, you made a simple factual error. (I assume you admit it’s an error, since you didn’t respond to **treis** ’s correction.) You also participated in other conversations. But what pulled me personally into the thread was a very specific claim. There were other posters writing about the “burden” of the debt in the Social Security Trust Fund. That is what prompted my scribblings. _The burden of all that debt._ And I pointed out, correctly, that the debt was not a burden. I used an analogy to demonstrate that. An awesome analogy. I was saying essentially the same thing that **treis** was saying, the same matter you had mistaken in your first post. (Only my analogy was way awesomer.) Keep in mind that this was an analogy to refute the _financial idea_ that the debt in the fund was a burden to the government. You can go and reread the first page. Those were the posts that pulled me into the thread. When I was first drafting Post 22, I was writing something like, “And then the Treasury borrows money to pay the interest into the SSTF, and then that interest is paid in benefits, but then all that money is in excess of what the SSTF needs, so part of the money is returned to Treasury in exchange for new bonds.” And in the middle of drafting all that nonsense, I was like, what the fuck am I doing? None of that matters! Just skip all those steps and get to the end of the discussion. And so I was all like, eh, Treasury gives new bonds to the SSTF. I’m not sure you will believe me on that, but I can promise that’s exactly how my draft of that post went. I took out a paragraph and a half because it just wasn’t necessary to explain the idea. It all nets out equal, you see? What was important was the financial idea. And this is when you stepped in. You brought up that court case thing. I demonstrated that the financial outcome was the same regardless of which side won. You brought up the fact that interest is paid in benefits, not new bonds. I demonstrated that was financially irrelevant. And this is where, from my perspective, you got things very wrong. Because these first arguments of yours? That’s not purely legalistic. They’re also based in a financial mistake, as I saw it. At that point in the thread, you give every indication of a _financial argument_. This is the post that tripped me: > [@Ravenman](#): > > Evidently you didn’t read what I was responding to: the idea that an IOU to yourself is worthless. Clearly, it is not, when the IOU is a U.S.-issued security, and wisely you concede this point. Thank you for explaining, in your own way, that **Shodan** was wrong in his example, and that your earlier post was in error. > > But to go one further, your response is factually wrong, and I’m once again frustrated that those who criticize the Social Security Trust Fund often lack the basic understanding of how the Trust Fund works. It’s a strawman argument every time this comes up. When the SSTF redeems a bond, the cash does not go in to buying securities again, as I bolded in your post. The bonds are redeemed for cash to pay benefits, not to buy additional securities. What you posted is a gross distortion, or at least a poor understanding, of _ **why the bonds exist** _. The last bit of emphasis I added. You are making an argument here about _why the bonds exist_. And by any reasonable reading that I can come up with, that argument is wrong. It is a cold, hard fact that you are in error. At least, that’s how I see it. It’s now looking to me like you’re retreating from that. It looks like you’re retreating to the strict letter of the law instead of a financial argument. But if I read you right originally, the fact remains: the bonds don’t exist for any financial reason related to the interest payments going in one bucket instead of another. I’m aware that the law says THIS MONEY GOES HERE, but that’s not _why the bonds exist_. They exist as an accounting placeholder, and nothing more. This placeholder can (potentially) have real legal consequences, yes. Your latest post to me is to point out that shit gets weird when the SSTF dries out. And I’m not arguing that shit gets weird. I started by arguing that the debt in the SSTF is not a burden (and it’s not), and then I started arguing that your reason about why the bonds exist was wrong. The SSTF bonds do not exist for the financial reason you were asserting. I even qualified my posts. I acknowledged more than one time that there are legal intricacies that could change things. Here’s an excerpt from before we were talking: “Obviously those legalities can be politically important. For instance, the debt ceiling would have to be raised to accommodate quadrillions of intragovernmental debt. But that’s just bureaucratic foofaraw. It doesn’t make any difference whatsoever on the government’s ability to pay itself interest.” Notice that the subject is the government’s debt burden. I point out that that is a political problem (i.e. a legal problem), not a financial problem. And in my long post to you, I said this “Obviously some of them will involve more wasteful bureaucratic foofaraw than others, and there might be legal issues on the side like the debt ceiling, but ultimately the net effect for any observer outside the government will be a perfectly identical result.” To get that identical result obviously requires political acknowledgement of the financial equivalency. I believe this relates to the same issue you had mistaken in your first post in the thread. The financial equivalence of the different systems – which is why the financial debt burden of the STFF does not exist – requires some political (legal) acknowledgement. I admit that right there in my posts. Did I point that out in every single post I wrote? Did I qualify every assertion? No. No, I did not. But when you say something a couple times, you no longer feel the need to say it again. To repeat your latest reply to me. > [@Ravenman](#): > > ETA: let me say this another way. If there was no practical distinction between the SS system and the rest of the government budget, there would be no need to adjust FICA or benefits when the Trust Fund runs dry. But that isn’t true, so there is a practical (as well as legal) distinction, QED. That’s fine. But I was admitting the legal intricacies even before you insulted my (awesome) analogy. Obviously I’m not going to argue with your analysis of the law. If we freeze the statutes as they currently exist, shit will get weird if the SSTF empties out. But that still doesn’t mean anything about the burden of the debt. My analogy? It was introduced into this thread to discuss the burden of the debt in the SSTF. Which is to say, it was _perfectly appropriate_ in the context it was introduced. (And also awesome.) It remains true that the SSTF as it’s currently instituted, and the alternative system in which no fund was created at all, are entirely equivalent financially. If no fund had existed at all, the Social Security as the public perceives it would be exactly identical. (To qualify those assertions for a third time: they would remain entirely equivalent until the strange case, possibly in two decades time, when the fund empties, or if another bizarre legal thingy like the debt ceiling happened.) If there are problems when the fund empties, they will be _political/legal problems_. It will have nothing to do with any financial reason for “why the bonds exist”. It will be a legal technicality. Which is important, yes. It will have practical effects, yes. But it’s not a _financial_ reason. (And every time I say “practical” in this thread, you can probably amend that to “non-political”. Almost everything about the political system strikes me as inherently impractical, even given the very real practical effects. That’s an emotional, instinctive reaction. Nothing rational about it.) And now I’m genuinely curious. What do you think would happen if the fund emptied out and Congress did nothing? I haven’t the slightest idea how that would work. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [August 14, 2014, 8:35pm UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/110 "2014-08-14T20:35:36Z")
> [@Shodan](#): > > Do you understand that Social Security is a government program? Yes, do you understand that the securities in the SSTF are not owned by the government? > [@](#): > > Look, I will explain what happened. > > The government took money away from the taxpayer in order to fund Social Security benefits. But they took away a lot more money than they needed to pay Social Security benefits. So they spent the rest of the money on everything else the federal government spends its money on - health care, defense, interest on the national debt, $200 hammers, guns for Mexican drug lords, etc. In order to keep track, the government put a special kind of IOU on its books. > > The IOU says that **the government** spent the Social Security money on non-Social Security things, and that **the government** will pay the money back when it is needed for Social Security benefits. > > OK, now the government wants to send Aunt Bertha her Social Security check. So they go to the taxpayers, who sent the money in to pay Social Security benefits, and say, "You sent us money to pay for Aunt Bertha. Instead, we bought knee pads for Monica Lewinsky. Remember how you sent us $X? Now you have to send us $X plus interest. Because now we really are going to give it to Aunt Bertha. Really. " > > That’s why there is no money in the Social Security trust fund. The money that the taxpayer sent in was spent, and not on Social Security. It was spent on other things. If there were money in the SSTF, then the taxpayer would not have to send in more money to pay for Social Security benefits - the Social Security benefits could be paid with money from the SSTF. > > But there isn’t any money in the SSTF. All the money to pay for Social Security benefits has to come from the taxpayer again, to make up for the fact that all the money the taxpayer sent in earlier to pay for Social Security was spent on things other than Social Security. The fact that the government has to tax you to repay its debt to the SSTF so taht the SSTF can pay its social security obligations does not make the debt held by the SSTF worthless. > [@](#): > > When people ask “is there money in the SSTF?”, what they are asking is “is there a source of funding for future Social Security benefits other than future taxes?” No there isn’t. I don’t think that is what theya re asking at all. I think theya re asking whether there is any value in the SSTF not whether the value is held in US government securities. You are simply engaging in rhetoric when you try to porttray the securities in the SSTF as being valueless because they must be repaid from the general revenue. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [August 14, 2014, 8:59pm UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/111 "2014-08-14T20:59:58Z")
> [@Tom\_Tildrum](#): > > Zero, for the reasons I explained above. Work through the steps. The SSTF can be eliminated (in a constitutionally satisfactory way), with no change to the Treasury’s balance sheet. Yes we all get that. But folks like shodan are latching onto the notion that the elimination of the SSTF wouldn’t cause a ripple on the federal balance sheet to means that there is nothing in the SSTF. Do you think there is any value held in the SSTF? Regardless of whether or not it is offset by some obligation somewhere else, do the bonds held by the SSTF have any value? Are they a real calim on real assets? ---
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [August 14, 2014, 9:25pm UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/112 "2014-08-14T21:25:22Z")
> [@Ravenman](#): > > For the bajillionth time: there is no cash in the SSTF because Federal law prohibits any cash balances in the SSTF. The SSTF consists of bonds that are constitutionally guaranteed. Therefore, the trust fund has a value of roughly $2.8 trillion despite not holding a single penny in cash. > > How much cash is in your investment portfolio? Currency is a liability of the Federal government. Bonds are a liability of the Federal government. If there was a warehouse somewhere filled with million dollar bills, it would make no difference (other than cash pays no interest - but even that would make no real difference). If you want to say that bonds have no value because they’re just pieces of paper printed by the government, you have to say the same thing of currency. Currency is just pieces of paper printed by the government. The mistake people make when they talk about government finances is that they treat them as of they worked like business or personal finances. They don’t. When you or I need money, we have to get it from someone else. The government doesn’t have to do that. It can - and does - create money. And that is a good thing. A growing economy needs a growing supply of money. ---
**Author:** ![BrightNShiny](https://avatars.discourse-cdn.com/v4/letter/b/7bcc69/32.png) [@BrightNShiny](https://boards.straightdope.com/u/BrightNShiny)\ **Post date:** [August 14, 2014, 9:32pm UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/113 "2014-08-14T21:32:18Z")
> [@furt](#): > > We can agree to disagree, then. > > The CBO’s projected gap assumes historic economic growth. I’m going to nitpick myself. I’ve been using the SS Trustees mid-line estimate when I’ve been discussing this, so I should have said SS Trustees instead of the CBO. However, both the CBO and the SS Trustees are fare more qualified then you or I to make these estimates. If you disagree, then pony up some figures. Otherwise, I have to think that you are just making stuff up. > [@](#): > > The demographics are each generation living longer and longer, but it still being politically impossible for either party to raise the SS eligibility age to keep pace. Life expectancy at retirement age hasn’t increased all that much, and we already have increases in the retirement eligibility age on-going and scheduled, and future life expectancy increases are already considered in the SS Trustee and CBO reports. You haven’t thought of anything that either the SS Trustees or CBO haven’t thought of. > [@](#): > > And I am skeptical about the ability of the economy of the next 50-100 years to match the growth rates of the last 50-100 years, which is what we think of as “historic economic growth.”. Just MHO. Tyler Cowen’s “The great stagnation” covers a lot of the arguments I would make. Ok, now we’re off into ridiculous land. There’s no point in worrying about what happens 50-100 years from now, because we have no idea what’s going to happen in 50-100 years. All you can do is make reasonable estimates, using data, for things that will happen 10, 20 or 30 years out (and the further out you go, the less likely accurate the estimates will be), and plan accordingly. This is exactly what the SS Trustees do, so spare us the fear mongering. ---
**Author:** ![Stratocaster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/stratocaster/32/16393_2.png) [@Stratocaster](https://boards.straightdope.com/u/Stratocaster)\ **Post date:** [August 14, 2014, 9:36pm UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/114 "2014-08-14T21:36:04Z")
> [@Damuri\_Ajashi](#): > > You are simply engaging in rhetoric when you try to porttray the securities in the SSTF as being valueless because they must be repaid from the general revenue. This is where these threads always jump the rails. Shodan explained, factually, what occurred with the excess SS revenue. It was not a rhetorical device, is was in direct response to the OP. “Is there money in the Social Security Trust Fund?” No. There is an assurance the government will raise the dough, on account of they already spent the excess on, well, stuff. How will they do it? As I said previously, just for giggles we can point out it could be funded by a future surplus, but that’s a silliness we won’t indulge, okay? So where then? From new taxes or new debt, and the latter just kicks the can for new taxes down the road so it amounts to the same thing. Put whatever spin you want on it. Join the chorus of “so what, that matters not a whit.” Or join the “this is a Ponzi scheme!” tribe. Whatever rhetoric you’d prefer, the facts remain what they are. There’s no money in the SSTF. That’s what the OP asked. ---
**Author:** ![Stratocaster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/stratocaster/32/16393_2.png) [@Stratocaster](https://boards.straightdope.com/u/Stratocaster)\ **Post date:** [August 14, 2014, 9:39pm UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/115 "2014-08-14T21:39:50Z")
> [@Damuri\_Ajashi](#): > > Do you think there is any value held in the SSTF? Regardless of whether or not it is offset by some obligation somewhere else, do the bonds held by the SSTF have any value? Are they a real claim on real assets? They have a value that is exactly offset by the liability residing on a different page of the Feds’ financials. In the aggregate, the Feds have zero. That’s why when they pay off the bonds, they will have to raise the money. Why is this so difficult to grasp? You can say that doesn’t matter, you’re sure they’ll raise the $$$ without breaking a sweat. But they will have to. Why? Because they already spent it, and the SSTF is essentially an IOU. ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [August 14, 2014, 11:36pm UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/116 "2014-08-14T23:36:37Z")
Hellestal: are you referring to treis’s post where he says that Congress could legislate the SSTF out of existence and the bonds it holds would “go poof” once transferred to the general fund? While Congress could eliminate the trust fund, the bonds could not constitutionally “go poof”. There must be some kind of repayment of the bonds - it is required by the 14th Amendment. The intragovernmental debt is on the books, and has to be resolved somehow, probably by issuing debt to the public in order to retire the intragovernmental debt. Anything short of that would be an unconstitutional law, so the idea that those bonds could “go poof” is quite simply illegal. You asked what happens if all the bonds in the Trust Fund are redeemed and what would happen to SS payments: they will be reduced to about 77% of promised benefits, which is what FICA revenues would support. There is no ability under the law to use general revenues to pay the full benefits. I’ll try to respond to the rest of your points later. ---
**Author:** ![EdwinAmi](https://avatars.discourse-cdn.com/v4/letter/e/5fc32e/32.png) [@EdwinAmi](https://boards.straightdope.com/u/EdwinAmi)\ **Post date:** [August 14, 2014, 11:54pm UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/117 "2014-08-14T23:54:13Z")
> [@](#): > > the bonds in the Social Security Trust Fund are constitutionally guaranteed. You mean there’s a piece of paper somewhere that says that the debt shall never be ignored? Oh wow! Wonderful! And I thought it would be important whether or not there’s actually any money to pay the debt! What a fool I was ---
**Author:** ![EdwinAmi](https://avatars.discourse-cdn.com/v4/letter/e/5fc32e/32.png) [@EdwinAmi](https://boards.straightdope.com/u/EdwinAmi)\ **Post date:** [August 14, 2014, 11:57pm UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/118 "2014-08-14T23:57:19Z")
what needs to be remembered in this debate, that part of the complaint comes from the fact that other countries have similar wlefare systems and funds, and in fact more, however they _invested_ the money. Any years there were surpluses, the money was INVESTED in things. Our thingy just entirely depends on future generations being able to pay for it. Typical, as Americans, we tried to do something good but we implemented it in the most stupid fucked up way ---
**Author:** ![treis](https://avatars.discourse-cdn.com/v4/letter/t/bc79bd/32.png) [@treis](https://boards.straightdope.com/u/treis)\ **Post date:** [August 15, 2014, 1:11am UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/119 "2014-08-15T01:11:18Z")
> [@Damuri\_Ajashi](#): > > Yes, do you understand that the securities in the SSTF are not owned by the government? Huh? Who do you think owns them? ---
**Author:** ![UDS](https://avatars.discourse-cdn.com/v4/letter/u/ecae2f/32.png) [@UDS](https://boards.straightdope.com/u/UDS)\ **Post date:** [August 15, 2014, 1:38am UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/120 "2014-08-15T01:38:38Z")
> [@EdwinAmi](#): > > what needs to be remembered in this debate, that part of the complaint comes from the fact that other countries have similar wlefare systems and funds, and in fact more, however they _invested_ the money. Any years there were surpluses, the money was INVESTED in things. Such as government bonds. In many cases, US government bonds. In many other cases, bonds issued by their own governments. > [@EdwinAmi](#): > > Our thingy just entirely depends on future generations being able to pay for it. > Typical, as Americans, we tried to do something good but we implemented it in the most stupid fucked up way You are too hard on your nation, EdwinAmi. If you think about it for a minute, _all_ retirement income schemes depend on the ability (and willingness) of future generations to pay for them. You invest your retirement savings in corporate stocks? You’re dependent on future generations of workers and managers generating profits to pay dividends on those stocks, which in turn depends on future generations of consumers being willing and able to purchase the goods and services those corporations sell. You invest your retirement savings in real estate? You are dependent on future generations of tenants being willing and able to pay the rents on those properties which will be necessary to provide you with the retirement income to which you would like to be come accustomed. There is a fixed point around which all this must resolve. The beer that you will drink in retirement has not yet been brewed; the bread you will eat has yet to be baked. However you structure it, retirement income involves people who brew beer and bake bread giving some of it to you, in return for your doing absolutely nothing at all (because that’s what being retired involves). You can buy stocks, government securities, land, insurance policies or any other investment; the future return on them always depends on future generations being able to pay it. Social security is basically a form of insurance policy; you pay social security taxes (premiums) now, in return for which the insurer (the government) promises to pay you an income in retirement for as long as you live (the policy proceeds). The government could invest those premiums to build up a fund of assets, or it could spend those premiums on current liablities and meet its obligations to you, when they fall due, out of future tax revenues, or it could pursue some combination of the two approaches. But, either way, the money the government gets to pay your pension when it falls sue will come from future generations of workers. If they’re not able to pay it, they’re not able to pay it. You face the same risk in either case. [Previous page](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391.md?page=5) [Next page](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391.md?page=7)