Social Security Trust Funds

"The Social Security Trust Funds are the Old-Age and Survivors Insurance (OASI) and the Disability Insurance (DI) Trust Funds. These funds are accounts maintained by the Department of the Treasury. They serve two purposes: (1) they provide a mechanism for keeping track of all income to and disbursements from the trust funds, and (2) the assets of the funds provide automatic spending authority. To clarify the second point, no legislation is needed to spend a portion of trust fund assets on benefits or administrative costs (the Social Security Act limits expenditures to benefits and administrative costs).

"Benefits to retired workers and their families, and to families of deceased workers, are paid from the OASI Trust Fund. Benefits to disabled workers and their families are paid from the DI Trust Fund.

"A Board of Trustees oversees the financial operations of the trust funds. The Board reports annually to the Congress on the financial and actuarial status of the trust funds."

"By law, all income to the trust funds that is not immediately needed to pay expenses is invested, on a daily basis, in securities guaranteed as to both principal and interest by the Federal government. ... Data on trust fund investments provide a breakdown by interest rate and trust fund for any month after 1989." -- Social Security Administration Trust Fund FAQs.

"If Social Security has any problems in its current form, they won't become apparent for decades, and if they do, they could easily be dealt with. Conceding anything on this point only strengthens the hands of the privatizers, who are using fear of bankruptcy to promote an ugly and dangerous agenda." --Doug Henwood, Left Business Observer, March 2005. 

Raiding the Trust Funds
"Anticipating the strains that would be put on Social Security, lawmakers raised the payroll tax in the 1980's (a disproportionate amount of which is paid by the lower and middle classes) and created a Trust Fund into which surpluses would be placed and saved in order to keep the system solvent during the lean years of the baby boomer retirements. In order to sink Social Security, conservatives would need to plunder the surplus and break the bank of the trust fund. ...

"Of course Bush lied or flip-flopped, or whatever you want to call it. He began raiding the trust fund and the surpluses in his first months in office, and hasn't stopped since. According to the Historical Budget Data put out by the Congressional Office of Management and Budget in early 2004, to cover the cost of his tax cuts, Bush will have to spend the entire projected Social Security surplus of $2.4 trillion from 2005 through 2014. The lockbox will be completely looted, just as an avalanche of baby boomers are set to retire. While the Trust Fund is looted, and the baby boomers' retirement looms in the distance, the national budget shows little capacity to make up the difference, or reinforce the effort. This of course, was part of the plan.

"The Bush administration has succeeded in greatly diminishing the revenue stream through far reaching and, if they get their way, permanent tax cuts which many economists have described as making the deficit recovery proof because of the breaks given on the taxation of passive income. He accomplished this while encumbering the government with the enormous spending obligations required to fight the wars in Iraq and Afghanistan. There is a reason that no government in the history of the United States, or the world for that matter, has cut taxes while at war. The deficits become unmanageable, and the resources of the government scarce. But Bush didn't stop there. He also passed the staggeringly expensive prescription drug benefit, even though he had to conceal the true cost from Congress and threaten to fire Richard Foster, the Medicare actuary, if he revealed the real estimates. This was a two-fold success in that he further drove up the deficit, while at the same time making Medicare even more expensive and ultimately unwieldly, an argument that will be used in the future to justify its 'unfortunate' demise.

"Which takes us up to the present. We are on the verge of the baby boomer retirement rush which would have put a strain on Social Security and Medicare had the surpluses been left intact inside a 'lockbox.' Instead they have been plundered, and if Bush's tax cuts are made permanent, they will remain bankrupt in perpetuity. The budget is hamstrung with intransigent obligations that are exceeding the paltry revenue trickling in as a result of widespread tax cuts that, according to the non-partisan Congressional Budget Office, overwhelmingly favor the wealthiest Americans, with millionaires receiving $72 to every non-millionaires' $1. There is no room in the budget to bail out Social Security and Medicare, but a crisis is looming."


 * Source: Total Information Awareness Blogspot, August 27, 2004.
 * Also see Bush administration financial misconduct and lack of accountability.

Bush: "There is no 'trust fund' ..."
On April 5, 2005, after visiting the Bureau of Public Debt in Parkersburg, West Virginia, President Bush said:


 * "I have just come from the Bureau of Public Debt. ... I went there because I'm trying to make a point about the Social Security trust. You see, a lot of people in America think there's a trust, in this sense -- that we take your money through payroll taxes and then we hold it for you, and then when you retire, we give it back to you. But that's not the way it works.


 * "There is no 'trust fund,' just IOUs that I saw firsthand, that future generations will pay -- will pay for either in higher taxes, or reduced benefits, or cuts to other critical government programs."

Paper, Not Gold ... Just Promises

 * Although the Social Security Trust Fund "does contain bonds that represent cash owed to the Social Security system, ... cashing those bonds to pay for benefits will cost the federal government more than $5 trillion in the not-too-distant future," according to a February 2005 Cato Institute op-ed.


 * "And indeed, the trust fund is a pile of paper, not a pile of gold. But those papers -- just like other government securities -- represent promises backed by the 'full faith and credit' of the United States. ... So was Bush really suggesting that those promises might not be kept? That American workers have somehow been defrauded?" --Dan Froomkin, Washington Post, April 6, 2005.


 * "That is an amazing, and probably unprecedented, statement. It is unlikely that any prior U.S. president ever called the integrity of government bonds into question. ... President Bush could not honestly have expected to find vast stores of gold or silver hoarded in the trust fund." --Economist Dean Baker, co-director of the Center for Economic and Policy Research (CEPR), April 6, 2005.

Violating the Constitution

 * "Defaulting on our debts is a direct violation of the United States Constitution, the document that Bush, all of Congress, all of our Judiciary, and every member of our military have all sworn to uphold... where is the outrage?" --lestatdelc, Daily Kos, April 6, 2005.


 * According to the U.S. Constitution, Amendment XIV, section 4 says that "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."

U.S. Social Security privatization
Paul Krugman wrote in the March 15, 2005, New York Times that the "argument over Social Security privatization isn't about rival views on how to secure the program's future - even the administration admits that private accounts would do nothing to help the system's finances. It's a debate about what kind of society America should be.

"And it's a debate Republicans appear to be losing, because the public doesn't share their view that it's a good idea to expose middle-class families, whose lives have become steadily riskier over the past few decades, to even more risk. As soon as voters started to realize that private accounts would replace traditional Social Security benefits, not add to them, support for privatization collapsed." 

Documentation

 * Social Security Trust Fund Data, ssa.gov website (updated March 21, 2005), accessed June 15, 2005.
 * Frequently Asked Questions About Social Security's Future, ssa.gov website (updated to reflect the 2005 Trustees' Report), accessed June 15, 2005.

Websites

 * "Protecting Social Security," Campaign for America's Future website.
 * "Retirement Security," Century Foundation website.
 * Social Security, New-Englightenment.com website. Scroll down through Norman D. Livergood article "Bush's Plan to Loot Social Security" to news links.
 * The Social Security Network / socsec.org website.
 * There Is No Crisis.com website.

Quotes

 * "Confessions" (2000-2005), Uncle-Scam.com, undated.

Taxed twice "Tax on Social Security Income"

News Links

 * Issue Area: Social Security, FAIR website.
 * "Social Security," Media Matters for America, links November 2004-current.

1999

 * Unofficial Senate Transcript re "dipping" into Social Security Trust Fund for spending other than Social Security, 106th Senate, First Session, May 20, 1999.
 * Press Release: Congresswoman Shelley Berkley (D-NV) Voted to Lock Up Social Security While GOP Plans to Raid Surplus, Office of Shelley Berkley, September 30, 1999.
 * Ed Henry, "Is the New Speaker of the House Just Dumb or Being Deceptive?" EtherZone, October 8, 1999: "How can they fix Social Security when they don't even seem to understand the problem? Sometimes it seems as though they don't even understand their own finance system." Re Dennis Hastert.

2001

 * Ed Henry, "Hook, Line & Sinker, Do You Enjoy Being Robbed?" EtherZone.com, January 27, 2001.

2004

 * Ed Henry, "Trust ... Uncle Scam," EtherZone.com, May 21, 2004.
 * "Anatomy Of A Murder," Total Information Awareness Blogspot, August 27, 2004.
 * Nouriel Roubini, "Social Security Privatization as the Mother of All Con-Man Smoke-and-Mirrors Shell-Games," RoubiniGlobal.com, November 28, 2004.

2005

 * Kevin Drum, "Defaulting on the Trust Fund," Washington Monthly, February 4, 2005: "After all, the only thing that happens in 2018 is that the trust fund starts redeeming some of its bonds, so there's no reason to mention this date as a 'problem' unless you think that redeeming those bonds is also a problem."
 * Bernard, "There Is No Trust," Moon of Alabama, February 9, 2005.
 * "How to Talk to a Conservative About Social Security (If You Must)," Think Progress, February 9, 2005.
 * Dan Froomkin, "The Amazing Disappearing Trust Fund," Washington Post, February 11, 2005.
 * "Cato Scholar on the Trust Fund Myth," Cato Institute, February 18, 2005; posted on SocialSecurity.org website.
 * Doug Henwood, "Social Security, revisited," Left Business Observer, March 2005.
 * Paul Krugman, "The $600 Billion Man," New York Times, March 15, 2005.
 * Paul Krugman, "The Social Security Trustees Explain Their Productivity Assumptions," The Unofficial Paul Krugman Archive, March 23, 2005.
 * George W. Bush, Speech: President Tours Bureau of Public Debt, Bureau of Public Debt, Parkersburg, West Virginia, April 5, 2005.
 * George W. Bush, Speech: President Participates in Social Security Conversation in West Virginia, West Virginia University at Parkersburg, Parkersburg, West Virginia, April 5, 2005.
 * Caren Bohan, "Social Security Trust Fund a Fiction, Bush Says," Reuters, April 5, 2005.
 * Dennis Cauchon, "'Trust fund' is locked in filing cabinet," USA Today, April 5, 2005.
 * Ron Hutcheson, "Bush questions worth of Social Security Trust Fund," Knight Ridder Newspapers, April 5, 2005: "if the IOUs are worthless, so is the 'full faith and credit' of the federal government, independent financial analysts said. The reality is a little more complicated than Bush acknowledged, and it goes to the heart of the debate over Social Security's future."
 * Deb Riechmann, "Bush questions Social Security trust fund," AP, April 5, 2005.
 * Statement: "DeFazio Challenges Bush on the Integrity of the Social Security Trust Fund," U.S. House of Representatives, April 5, 2005; also see DeFazio's Letter to Bush, April 7, 2005.
 * "Bush Proposes Default on S.S. Trust Fund T-Bonds," from the Congressional Record, April 5, 2005; posted at The Hungry Blogger, April 6, 2005.
 * "Bush Questions Social Security Trust Fund," NewsMax, April 6, 2005.
 * Anne E. Kornblut, "Bush Renews Focus on His Plan for Revamping Social Security," New York Times, April 6, 2005.
 * Dean Baker, "Mr. President, This is How the 21st Century Economy Works," Center for Economic and Policy Research, April 6, 2005.
 * Joshua Micah Marshall, Re SS Trust Fund, Talking Points Memo, April 6, 2005.
 * "Veterans for Peace Joins 'Impeach Bush & Dick' Campaign," Birmingham Indymedia, April 6, 2005.
 * "Impeachable Offense," Desert Rat Democrat, April 6, 2005. re war in Iraq and public debt.
 * Dan Froomkin, "Promises, Promises," Washington Post, April 6, 2005.
 * "Rangel: Bush 'Impeachable' for Social Security 'Fraud'," NewsMax.com, April 14, 2005.
 * Mindles H. Dreck, "IOUs for dummies," Asymmetrical Information, April 30, 2005.
 * "Is the Social-Security Trust Safe?" ZFacts.com, last modified June 7, 2005.
 * David Espo, "Senators Consider Boosting Retirement Age," AP, June 15, 2005.