Actually, it’s a question about the Social Security trust fund.
Okay, so surpluses from the payroll tax are used to buy bonds, which make up the assets of the trust fund. When the payroll tax can no longer cover the cost of Social Security, the bonds will be cashed in to pay the difference. Am I correct so far?
Here’s my question: hasn’t the money that was used to buy the bonds already been spent? Doesn’t this mean that when those bonds start getting cashed in, the government will have to get the money from somewhere else (like, say, taxpayers)?
More broadly, how is a country buying its own debt (in the form of bonds) any different from simply putting off payment?
(Also, please note which forum I placed my question in; I’m not looking for a debate. Thanks)
You are 100% right. This “funny money” business is one reason why there are such wide differences in estimates as to when the things will crash. Realists think in terms of 10 years or less. Enron-accountant types (which make up 99+% of the people with media access) say its 30 years since they assume the money to pay back the fund will magically appear.
If a company was caught cooking the books this way, people would get very, very angry. A loan to yourself is not an asset.
The trust fund doesn’t belong to the government.
It belongs to you.
The government borrowed money from you to conduct its buisness.
Nevermind if the money was spent wisely or if it will cost taxpayer money to pay it back.
Look at it this way.
You loaned the gas station owner some money to be paid back with interest.
Will the owner have to increase gasoline prices to pay back the loan. Hint yes.
Do you care if your gas price goes up?
Are you going to say " AW just forget it?"
You see the service station owner doesn’t want to pay it back.
It was seen as easy money when he borrowed it . Now he doesn’t want to live up to his responsibilities.