This is not the first time I’ve addressed this topic in this space. That said, it is difficult to overstate the enormous danger which exists with reference to the Social Security program. P&R puts it well:
They’re borrowing from themselves to create this illusion that you have a savings account (Social Security Trust Fund) and that they haven’t borrowed as much as they have.
So now (as of 2010), the ongoing expenses of Social Security are more than the FICA revenue intended to sustain it. That means they’re dipping into the imaginary savings account – the Social Security Trust Fund – to meet expenses. That means the general fund revenue has to cover the day-to-day expenses of social security because general fund IOUs are all that is in that Trust Fund. Indeed, calling it a “Trust” Fund is the height of irony.
He’s got a simple little equation there as well, explaining how this works. Go and read it forthwith.
In addition to his statement about the irony of the “trust” fund, allow me to add that we should not overlook the irony apparent in Social “Security.”