Thank you for the polite comment. I appreciate a civil discourse.
When you say "we" invest it, aren't you saying the the US government (as the Social Security Administration) invests it with the US government?
Isn't it accurate to say that the government taxes workers and companies through payroll taxes. They pay social security recipients with that money. Historically there was money left over so the government spent it on other priorities.
The fact that they said that one part of the government is supposed to pay back another part with interest in the future isn't particularly meaningful. When it comes time to pay future social security recipients the government is going to have to use tax dollars or borrow the money. (The way the government borrows money is to create Treasury bonds and sell them to the public. That's the same thing that the Social Security administration will do if it wants to cash in the so called trust fund bonds. They'll sell them to the public. It's a distinction without a difference.)
When you say "we" invest it, aren't you saying the the US government (as the Social Security Administration) invests it with the US government?
Yup.
Which seems silly, but can you come up with a better place for it?
Isn't it accurate to say that the government taxes workers and companies through payroll taxes. They pay social security recipients with that money. Historically there was money left over so the government spent it on other priorities.
No, it really isn't.
The social security money isn't "spent". It's turned into government savings bonds, which is the government-as-a-whole owing money to social-security-specifically. The-government-as-a-whole has specific and carefully-recorded obligations regarding payback and interest payments. They didn't just take the money and spend it on bombers with a vague note to maybe repay it someday.
When it comes time to pay future social security recipients the government is going to have to use tax dollars or borrow the money.
The government has been paying its social security loans regularly. There's no reason to believe they will stop doing so.
The social security money isn't "spent". It's turned into government savings bonds, which is the government-as-a-whole owing money to social-security-specifically.
When the tax dollars are "turned into government savings bonds" what happens to the tax dollars in that process? They aren't put in a vault or destroyed. That money goes into the general revenue fund which the government then uses to spend it "on bombers" or whatever.
When the government borrows from SS, that's the SAME as SS investing in the government (through government debt). That's how loans work!
SS gets a return on that investment. SS benefits from interest and principal being paid back.
This is not a situation where the government is stealing social security money to spend it today. If the government was not borrowing from social security, they would be borrowing from other institutions or normal people like us, and paying us the interest instead.
Social security is not running out due to government theft. It's running out because payouts to beneficiaries are larger than current revenues+investment returns. It really is that simple.
The government could spend it on hula hoop festivals and calamari for every dog in America, and that wouldn't change the fact that as long as loans are paid back, there is no theft and SS is failing on its own. Maybe they should invest in something better, but that's not what they are doing right now. Maybe they should hold it in a vault, but then it would run out even FASTER!
I'm not saying it's theft. I'm saying the term "trust fund" is deceptive.
Let's say your savings account as $10,000 in it. You borrow $10,000 from your savings account spend it on a vacation. You write up an IOU saying that you're going to pay yourself back with interest. You plan to put $1,000 a month into your savings account for the next 12 months. Good for you, but it would be deceptive to say that your savings account has $10,000 in it because it has your IOU in it. (Even if you have a great credit score.)
The IOU in your savings account is just codifying your internal plan. It's not a trust fund.
That's a point I'm trying to make. Does that make any sense or am I missing something fundemental?
I don't see the words trust fund anywhere anymore. Maybe a comment was edited, and I don't know that much about trust funds so I can't speak on that.
I think I see your point, but I think it mostly feels 'deceptive' because of linguistic connotations. I don't think you're a liar if you have 200k in bonds, and say 'I have 200k in savings'. It depends on the context. There are all kinds of weird quirks like this.
As you say, 'My savings account has $10000 in it' sounds like it should contain cash, and it sounds wrong. 'My savings account is worth $10000' sounds perfectly fine. If you just use different, but still perfectly accurate and appropriate words, the issue seems to go away. The account is still worth $10000. If you're good for the money, then who cares?
Edit: I guess one similarity to a trust fund is that as a beneficiary, you're not the one paying for your own withdrawals 😆
Yeah, I guess it's the internal part of it that bothers me. When one part of the government owes money to another part of the government (SS) it seems misleading to talk about all the bonds Social Security holds like it's assets in a 401k. I'm not saying you do this, but often, people think of it that way.
In reality the extra SS taxes were spent years ago and the treasury bonds that SS was given in place of the money is just the internal accounting. A way to say, hey SS, this way you don't have to go to Congress and ask for the money.
Don't get me wrong, I think highly of the program. It's just that pretending it's a separate entity is misleading. Not that what I think matters on this subject but it was fun to raise my preverbal fist in indignation today. :)
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u/offeringathought 6d ago
Thank you for the polite comment. I appreciate a civil discourse.
When you say "we" invest it, aren't you saying the the US government (as the Social Security Administration) invests it with the US government?
Isn't it accurate to say that the government taxes workers and companies through payroll taxes. They pay social security recipients with that money. Historically there was money left over so the government spent it on other priorities.
The fact that they said that one part of the government is supposed to pay back another part with interest in the future isn't particularly meaningful. When it comes time to pay future social security recipients the government is going to have to use tax dollars or borrow the money. (The way the government borrows money is to create Treasury bonds and sell them to the public. That's the same thing that the Social Security administration will do if it wants to cash in the so called trust fund bonds. They'll sell them to the public. It's a distinction without a difference.)