Right Voices

Social Security Trust Fund Sits in Drawer

The Social Security trust fund really does exist ” nestled in the bottom drawer of an unremarkable government file cabinet.

It’s in a pair of white loose-leaf notebooks holding plastic page covers. Each caresses a piece of paper representing a bond worth a staggering amount of money. Say, $8,577,396,000.00 ($8.577 billion), due on June 30, 2013, with 6.5 percent interest.

Sort of. Actually, the entire setup is, well, a setup:
_The off-white file cabinet in the office building by the Ohio River.
_The electronic locks.
_The papers ” signed by Susan Chapman of the Office of Public Debt Accounting ” obligating the “full faith and credit” of the United States to make good on the money owed.

“The paper is symbolic,” says Pete Hollenbach, spokesman for the U.S. Bureau of Public Debt, the creation of a 1994 law that anticipated the current debate about Social Security’s solvency and whether the trust funds held anything more than IOUs.

As the computer era flowered, Congress passed legislation requiring the Treasury to create a “physical document in form of bond, note or certificate of indebtedness, rather than accounting entry.”

Now, as then, the paper is an anachronism in a system that provides benefits to 47 million Americans.

This is a very good article about Social Security and should be read in full.

Basically the Governmet borrows all the surplus money and promises to pay it back – - with interest. Yet, the federal government doesn’t have that kind of cash just sitting around to be used to pay back the bonds. Does this worry them? Definitely not because the bonds are not like those dallied about for just anyone – - they are not guaranteed by law to be redeemable. So in other words – - forget about the IOU’s being paid back.

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