# 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:** 7
**Author:** ![EdwinAmi](https://avatars.discourse-cdn.com/v4/letter/e/5fc32e/32.png) [@EdwinAmi](https://boards.straightdope.com/u/EdwinAmi)\ **Post date:** [August 15, 2014, 2:01am UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/121 "2014-08-15T02:01:16Z")
> [@](#): > > Such as government bonds. In many cases, US government bonds. In many other cases, bonds issued by their own governments. No. There are other systems in other countries that are actually invested in actual things, like a mutual fund would be. The whole system isn’t entirely dependent on taxpayer money. It was a stupid fucking thing to write the law the way it was written. ---
**Author:** ![Lord\_Feldon](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lord_feldon/32/341_2.png) [@Lord\_Feldon](https://boards.straightdope.com/u/Lord_Feldon)\ **Post date:** [August 15, 2014, 2:09am UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/122 "2014-08-15T02:09:31Z")
> [@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 Right now we owe, eventually, about $2.8 trillion to American taxpayers who will use that money on American goods and services. If that’s so fucked up, who would you rather get that money? Because we’d still owe _someone_. ---
**Author:** ![EdwinAmi](https://avatars.discourse-cdn.com/v4/letter/e/5fc32e/32.png) [@EdwinAmi](https://boards.straightdope.com/u/EdwinAmi)\ **Post date:** [August 15, 2014, 2:12am UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/123 "2014-08-15T02:12:18Z")
> [@](#): > > Where would you rather have our debt payments go? Because we’d still owe someone that money. What? I think you misunderstood. I know for a fact that with Singapore’s Health Accounts system, and from what I understand a number of other government systems of various kinds of welfare, any surplus money was taken and invested in the markets. This way, they were not dependent solely on taxes in the future ---
**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 15, 2014, 2:50am UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/124 "2014-08-15T02:50:36Z")
> [@Stratocaster](#): > > 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? This is rhetorical special pleading. If the SSTF had loony bonds in it, it wouldn’t have money either according to your logic, it would just have an assurance that the Canadian government will pay it money. Whether the money comes from a future surplus borrowing, THAT is where money becomes fungible. It doesn’t matter to a security holder the particulars of how the money is repaid. Fungibility becomes less relevant when there is no intermingling of monies and there is no intermingling of assets owned by the SSTF and the general treasury. > [@](#): > > 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. So you think the OP was asking if there was actual cash in the SSTF? I don’t think that is what they were asking at all based on the examples given in the OP. They were asking about whether there was real value in the SSTF. ---
**Author:** ![Hellestal](https://avatars.discourse-cdn.com/v4/letter/h/3ab097/32.png) [@Hellestal](https://boards.straightdope.com/u/Hellestal)\ **Post date:** [August 15, 2014, 2:53am UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/125 "2014-08-15T02:53:50Z")
> [@Ravenman](#): > > 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. I don’t understand. Every bond that Treasury reacquires is instantly “resolved” the moment they get their dirty mitts back on the thing. Every year the SSTF sells about a trillion dollars of bonds to Treasury (and buys a similar-but-not-quite-equal amount.) When the fund sells a bond to Treasury, that bond is resolved. Treasury reacquiring its own issued debt inherently resolves that debt. That’s just… how debt works. We’re not talking about a shell corporation, or a subsidiary, or anything like that. We’re talking about Treasury itself. Congress dissolves the fund. Congress gives the bonds to Treasury. The moment Treasury touches their own debt, it’s not debt anymore. It’s gone. This literally happens all the time with bond repurchases. It happens by the trillion annually. Are you saying Congress would not be authorized to just _give_ the bonds to Treasury? Like, they could dissolve the fund and mail each US citizen eight thousand in bonds, but they couldn’t just plain _give_ it to Treasury? (Side note: With Congressional cooperation, and the right computer system, there’d be no need to issue any debt to the public. It’d be pretty easy to do. Assuming the normal par value of these bonds is at most a thousand bucks each, Treasury would need at most a thousand dollars to resolve the entire debt of more than 2.5 trillion. They buy a bond from the Trust Fund, just as they do by the trillion every year. Congress allows any money in the fund to be automatically deposited back at Treasury. No constitutional issue, since it’s money and not debt. They do it again. And again. And more than 2.5 billion times. POOF. Get the computers set up and it wouldn’t take too long at all.) ---
**Author:** ![EdwinAmi](https://avatars.discourse-cdn.com/v4/letter/e/5fc32e/32.png) [@EdwinAmi](https://boards.straightdope.com/u/EdwinAmi)\ **Post date:** [August 15, 2014, 2:55am UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/126 "2014-08-15T02:55:17Z")
> [@](#): > > They were asking about whether there was real value in the SSTF. The lack of real money doesn’t count as a lack of real value? The whole system is dependent on future taxpayer money, when the demographics are collapsing (too few kids being made) and the economy is in the toilet. I mean, realistically we know it’s already doomed to bankruptcy. Even raising taxes won’t do it, it’s not like America is full of Monopoly guys eating caviar and truffles all day. All the studies that claim that raising taxes will work ignore the economy-suppressing effects of the taxes. Also, as far as we can tell, the rise in outlays needed has been and will be far more than was predcited when the boomers retire. ---
**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, 3:12am UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/127 "2014-08-15T03:12:08Z")
> [@Ravenman](#): > > 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. . No it’s not. The 14 amendment says: > [@](#): > > Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void. There’s nothing that requires what you claim. The treasury isn’t questioning the validity of the debt. They are simply resolving the debt since the payer and payee are now the same. ---
**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 15, 2014, 3:15am UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/128 "2014-08-15T03:15:49Z")
> [@Damuri\_Ajashi](#): > > 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. This just isn’t the case. GM and its pension fund are not commonly owned and operated. Social Security and the Treasury are. > [@Damuri\_Ajashi](#): > > …that money is not fungible with the federal revenue… It’s fungible in the sense that it’s all completely under the control of Congress and can be shifted around at Congress’ direction, just like any other federal revenue. As I noted above, Congress could satisfy the “constitutional guarantee” by ordering Treasury to pay off the bonds, then reset the status quo by ordering the SS Trustees to immediately repay the money to Treasury. In other words, the SSTF is just an accounting entry, wholly under Congressional control. > [@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 calim on real assets? Suppose my mother gives me my allowance of $5. I put it in my left pocket. Then I take the $5 out of my left pocket and put it in my right pocket, and in my left pocket I put a note saying “right pocket owes left pocket $5.” Does that note have real value? If I crumple it up and eat it, have I destroyed real value? Think of it this way: Suppose Congress had never created the SSTF, and instead, from the beginning up until today, all FICA has been paid directly into the Treasury, and all benefits have been paid directly out of the Treasury. Would anything about the Social Security system or the Treasury as whole be different? No. The same level of taxes could be assessed, the same level of benefits could be paid, and the debt owed by the Treasury would be identical. Nothing would be different if it had never existed; that’s why it has no financial significance. > [@UDS](#): > > 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). I agree with most of what you said, but this point is not accurate. Social Security is not insurance and makes no promises to future retirees, or even to current ones. Congress could cut payments tomorrow, or abolish the program in its entirety, and no citizen would have any legal claim upon the government for unpaid benefits. Private insurance, by contrast, is a legally enforceable contract; if a private insurer did not pay the full benefits that were specified at the time you took out the policy, you (or your beneficiary) could take the insurer to court and force it to pay. ---
**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 15, 2014, 3:24am UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/129 "2014-08-15T03:24:16Z")
> [@treis](#): > > Huh? Who do you think owns them? The SSTF. Lets say that the federal government pension fund held nothing but government securities. Who owns those securities? ---
**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, 3:35am UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/130 "2014-08-15T03:35:05Z")
> [@Damuri\_Ajashi](#): > > The SSTF. And who controls that? ---
**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 15, 2014, 3:37am UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/131 "2014-08-15T03:37:12Z")
> [@Tom\_Tildrum](#): > > This just isn’t the case. GM and its pension fund are not commonly owned and operated. Social Security and the Treasury are. Thats why I said a GM administered pension. If I give you an example of a company that administers its own pension plan does that make the analogy more valid? > [@](#): > > It’s fungible in the sense that it’s all completely under the control of Congress and can be shifted around at Congress’ direction, just like any other federal revenue. Thats not what they mean when they say fungible. They are trying to imply that holding something in the SSTF is just like holding something in the general treasury. Congress has to pass a law to just shift it around this stuff. It literally takes an act of congress. > [@](#): > > As I noted above, Congress could satisfy the “constitutional guarantee” by ordering Treasury to pay off the bonds, then reset the status quo by ordering the SS Trustees to immediately repay the money to Treasury. In other words, the SSTF is just an accounting entry, wholly under Congressional control. Yes they COULD change the law but until they do they are still bound by it. The fact that they could pass a law that would make the SSTF meaningless doesn’t mean that it is currently meaningless. Hell, congress and 3/4ths of the states could rewrite the constitution so the constitution is really meaningless because it could be changed:rolleyes: > [@](#): > > Suppose my mother gives me my allowance of $5. I put it in my left pocket. Then I take the $5 out of my left pocket and put it in my right pocket, and in my left pocket I put a note saying “right pocket owes left pocket $5.” Does that note have real value? If I crumple it up and eat it, have I destroyed real value? Thats not whats going on at all. Congress would have to pass a law repealing a bunch of social security laws to treat the assets in the SSTF as its own. If the SSTF needed to redeem the securities in the SSTF to pay benefits, congress would have to pay, they couldn’t say “well that really just my money anyway so I’ll give it to you later” > [@](#): > > Think of it this way: Suppose Congress had never created the SSTF, and instead, from the beginning up until today, all FICA has been paid directly into the Treasury, and all benefits have been paid directly out of the Treasury. Would anything about the Social Security system or the Treasury as whole be different? No. The same level of taxes could be assessed, the same level of benefits could be paid, and the debt owed by the Treasury would be identical. Nothing would be different if it had never existed; that’s why it has no financial significance. :smack::smack::smack::smack::smack:The question is not whether we need the SSTF or whether it makes any difference to the federal ledger whether or not we have an SSTF, the question is whether the SSTF holds anything of value. The fact that the federal government is indifferent to whether or not the SSTF even existis irrelevant. ---
**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, 3:40am UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/132 "2014-08-15T03:40:51Z")
> [@EdwinAmi](#): > > No. There are other systems in other countries that are actually invested in actual things, like a mutual fund would be. The whole system isn’t entirely dependent on taxpayer money. It was a stupid fucking thing to write the law the way it was written. Mutual funds can be invested in government bonds, EdwinAmi, and very commonly are, at least in part. For that matter, private retirement funds are very commonly invested in part (often in large part) in government bonds. As investments, government bonds have characteristics that make them particularly suitable to those investing with the objective of providing retirement income. ---
**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 15, 2014, 3:42am UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/133 "2014-08-15T03:42:56Z")
> [@treis](#): > > And who controls that? The social security trustees. They administer the social security trust fund in accordance with law. They are effectively bureaucrats. ---
**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, 3:44am UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/134 "2014-08-15T03:44:28Z")
> [@Damuri\_Ajashi](#): > > The social security trustees. They administer the social security trust fund in accordance with law. They are effectively bureaucrats. And who appoints this trustees and who writes the law? ---
**Author:** ![BrightNShiny](https://avatars.discourse-cdn.com/v4/letter/b/7bcc69/32.png) [@BrightNShiny](https://boards.straightdope.com/u/BrightNShiny)\ **Post date:** [August 15, 2014, 7:30am UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/135 "2014-08-15T07:30:30Z")
US bonds are the safest, lowest risk investment in the world. And that’s what you want for a retirement plan that has to function indefinitely. You don’t want to invest in risky investments, because you need some semblance of predictability in planning future revenue/payouts. For your individual retirement plan, sure, you might want to invest risky when you are young and convert that to less risky investments as you age. But Social Security is not an individual retirement plan. So, where are the SS Trustees supposed to “invest” the money? If you put it in an investment bank or the like, the taxpayer is already on the hook for shoring up investment banks in case of collapse. If you put it in the stock market, and the stock market has disastrous years, then the tax payer is going to have to make up the difference. No matter where you put the money, the tax payer is always on the hook for the risk. It would be different if we weren’t the most powerful economy in the world. It would be different if we didn’t have such a long history without unbroken government. But this is where we are. Maybe in 20 or 30 years, it will make sense for the SS Trustees to invest in Chinese bonds or something similar, but right now, the way we have it set up, is about the best way the US can set this type of plan. As for our overall debt, we’re at a debt ratio of a little over 100% of debt-to-GDP (depending on whose figures you are looking at). It ain’t great, but it’s not exactly disastrous. Plus, there are plenty of places we can wring pretty sizable cost savings out of the government without cutting benefits (such as allowing Medicare to negotiate on drug prices). And on top of that, we’re not even close to the highest tax rates we’ve had in those country or tax rates in many European countries (and some of them with higher tax rates are doing just fine). We’ve got a lot of room here to deal with our overall debt without cutting benefits. Like I said earlier, if you don’t want to view the trust fund as separate, that’s a valid way of looking at it (although that’s not exactly the way I would look at it). But we have plenty of ability to fund Social Security and deal with our debt for the foreseeable future. It just a question of whether or not we want to make the political decisions to do so. ---
**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, 8:40am UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/136 "2014-08-15T08:40:02Z")
> [@Damuri\_Ajashi](#): > > The social security trustees. They administer the social security trust fund in accordance with law. They are effectively bureaucrats. They are the Secretary of the Treasury, the Secretary of Labour, the Secretary of Health and Human Services, the Social Security Commissioner, and two other persons appointed by the President and confirmed by the Senate. The social security trustees are a government agency, created by s. 201 of the Social Security Act. Given this, attempts to make a distinction between the “Social Security Trustees” and “the Government” are unconvincing. ---
**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 15, 2014, 11:36am UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/137 "2014-08-15T11:36:41Z")
> [@Hellestal](#): > > Every bond that Treasury reacquires is instantly “resolved” the moment they get their dirty mitts back on the thing. The bonds have to be repaid, right? Simply possessing the bonds doesn’t resolve the debt - there has to be a satisfaction of the debt. Directing intragovernmental bonds to be given to the general fund doesn’t resolve the debt - are you expecting for the general fund to simply hold the bonds in perpetuity? Somehow they have to be made into cash so the money can be spent, right? You think we have $3 trillion just sitting in the general fund? No, there would at least have to be new public debt issued to reflect that our national debt would the. Be made up of $14 trillion of basically all debt held by the public. By saying the bond “goes poof” makes it sound like $3 trillion is simply eliminated from the national debt because the issuer and the holder of the bonds would the. Be the same. That just can’t be done - Congress can’t simply cancel debt that was lawfully issued. ---
**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 15, 2014, 12:05pm UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/138 "2014-08-15T12:05:19Z")
> [@treis](#): > > There’s nothing that requires what you claim. The treasury isn’t questioning the validity of the debt. They are simply resolving the debt since the payer and payee are now the same. So after the bonds “go poof” in your words, has the total national debt of the United States changed? ---
**Author:** ![Fuzzy\_Dunlop](https://avatars.discourse-cdn.com/v4/letter/f/848f3c/32.png) [@Fuzzy\_Dunlop](https://boards.straightdope.com/u/Fuzzy_Dunlop)\ **Post date:** [August 15, 2014, 12:56pm UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/139 "2014-08-15T12:56:02Z")
> [@Damuri\_Ajashi](#): > > But that is money it is entitled to through its ownership of securities. The federal revenue and the SSTF are different troughs. Social security is owed $3 trillion in revenue from the federal trough by virtue of its ownership of $3 trillion in treasury bonds. > [@Damuri\_Ajashi](#): > > 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. Exactly. That’s exactly what I’m saying. It’s a very important point. Your point, on the other hand, is nitpicking and irrelevant. ---
**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 15, 2014, 2:16pm UTC](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391/140 "2014-08-15T14:16:34Z")
> [@Ravenman](#): > > So after the bonds “go poof” in your words, has the total national debt of the United States changed? Of course not. Retirement of the bonds has not caused any money to enter or leave the government. [Previous page](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391.md?page=6) [Next page](https://boards.straightdope.com/t/is-there-money-in-the-social-security-trust-fund/695391.md?page=8)