Reply #94: No, "they" have not stolen the trust fund. No, the trust fund has not been "raided". That's baloney. [View All]

[TacticalPeek]

Is the Federal Government “Raiding” the Trust Funds?


No. Some critics have suggested that the lending of Social Security trust fund reserves to the Treasury represents a misuse of those funds. This view reflects a misunderstanding of how the Treasury manages the federal government’s finances.

When the rest of the budget is in deficit, a Social Security cash surplus allows the government to borrow less from the public to finance the deficit. (The “public” encompasses all lenders other than federal trust funds, including U.S. individuals and institutions, the Federal Reserve System, and foreign investors.) The Treasury always uses whatever cash is on hand — whether from Social Security contributions or other earmarked or non-earmarked sources — to meet its current obligations before engaging in additional borrowing from the public. There is no sensible alternative to this practice. After all, why should the Treasury borrow funds when it has cash in the till?

Back in 1938, the first Advisory Council on Social Security — a group of independent experts appointed to review the program’s long-term finances — firmly endorsed the investment of Social Security surpluses in Treasury securities:

The United States Treasury uses the moneys realized from the issuance of these special securities by the old-age reserve account in the same manner as it does moneys realized from the sale of other Government securities. As long as the budget is not balanced, the net result is to reduce the amounts which the Government has to borrow from banks, insurance companies and other private parties. When the budget is balanced, these moneys will be available for the reduction of the national debt held by the public. The members of the Advisory Council are in agreement that the fulfillment of the promises made to the wage earners included in the old age insurance system depends upon, more than anything else, the financial integrity of the Government. The members of the Council, regardless of differing views on other aspects of the financing of old-age insurance, are of the opinion that the present provisions regarding the investment of the moneys in the old-age reserve account do not involve any misuse of these moneys or endanger the safety of these funds.

Other Advisory Councils have reached the same conclusion.

http://www.cbpp.org/cms/index.cfm?fa=view&id=3299

Fight the right war. Nobody has stolen or raided anything.