Posted by
Always To The Right on Saturday, October 28, 2006 8:06:59 PM
My last post was about the Social Security Trust Fund myth. Now I have more to say about this subject. This information is from the General Accounting Office [GAO] booklet number GAO-01-199SP "Federal Trust and other Earmarked Funds" answers to FAQs. This booklet is worth reading, it will help you cut through the B.S. about how certain people want to "save" Social Security. Let me start with how federal trust funds are different from private trust funds.
In the private sector the named trustee has a fiduciary [holding in trust, requires a person to act soley in the interests of the person he represents] responsibility to manage the assets. In contrast the federal government does not have a fiduciary responsibility to the trust beneficiaries [us], and it can raise or lower future trust fund collections and payments or change the purposes for which the collections are used by changing existing laws. Also the Federal Government has custody and control of the existing funds as well as earnings of most federal trust funds.
Trust fund balances are really bookkeeping credits to the fund with actual cash commingled with other collections, large balances do not affect the government's ability to meet long-term commitments.
Any surpluses resulting are lent to the general fund of the Treasury and the funds are given special nonmarketable Treasury securities in return [even if the surpluses were not invested in Treasury securities, they would be used for other purposes]. These special securities are claims on the Treasury [IOUs] that can be redeemed in the future.
After 2017 [based on latest Annual Report] cash revenues will be insufficient to pay all program costs and Social Security will have to start redeeming some of its assets to obtain the cash needed to pay benefits.