mboeh/gist:4069267

## gistfile1.txt
"the government borrows from it... the government could borrow more money to pay it back"

No it doesn't. No it couldn't. Please please PLEASE read up on the structure of the Social Security system before parroting the right-wing line on this. (Did you notice your link here was to an advocate of privatization?)

Social Security payments are made from the current year's Social Security tax. Any surplus collected is, by law, used to purchase (essentially) Treasury securities. This is intragovernmental debt -- it's money the government owes itself. It's actually a huge part of our current federal debt.

The federal government then goes on to spend that money on services like any other revenue. It could potentially sequester that revenue in a fund, but what would it invest it in? What form of savings is more reliable than Treasury securities? You can't just pile up money in a vault somewhere.   So the government doesn't "borrow" from the Social Security Trust Fund -- the government's debt IS the Social Security Trust Fund.

The Social Security Trust Fund is not allowed to retain its surplus (how would it? the only stable way to save money is in government debt) nor is it able to sell those securities for any purpose other than covering current expenses. So no, the government can't "pay back" what it "borrowed" either -- all it'd be doing is transferring its debt from the Social Security Trust Fund to the open market.

Basically, when the Trust Fund was designed, it was understood that for a period of time the Social Security tax would collect more than the program needed to function. So they decided to 'save' the surplus as a legal obligation the US Government has to the program. The expectation now is that the US Government will pay for the program's deficit as long as the Trust Fund holds out -- which is until the '30s or so. This means either transferring the debt to the market, raising revenue, or cutting spending.

This gives us another 20 years or so to figure out how to adjust Social Security to make its long-run costs match its long-run revenue. To an extent, this happens automatically -- after all, the Baby Boomers aren't going to live forever, and then the much smaller Generation X will be retiring and having their benefits paid by the somewhat larger generations that followed (such as mine). The point of the Trust Fund is to smooth over those troughs. However, we might need to adjust some aspects of the program to keep it solvent. We can increase or eliminate the payroll tax cap, or increase the payroll tax, or add a Social Security tax to other forms of income (like capital gains), or increase the retirement age, or reduce benefits. If we do nothing at all, the last option will automatically take effect: benefits will be reduced.

In conclusion: ARGH, STOP SAYING THE GOVERNMENT LOOTED THE SOCIAL SECURITY TRUST FUND IT'S NOT TRUE
	"the government borrows from it... the government could borrow more money to pay it back"

	No it doesn't. No it couldn't. Please please PLEASE read up on the structure of the Social Security system before parroting the right-wing line on this. (Did you notice your link here was to an advocate of privatization?)

	Social Security payments are made from the current year's Social Security tax. Any surplus collected is, by law, used to purchase (essentially) Treasury securities. This is intragovernmental debt -- it's money the government owes itself. It's actually a huge part of our current federal debt.

	The federal government then goes on to spend that money on services like any other revenue. It could potentially sequester that revenue in a fund, but what would it invest it in? What form of savings is more reliable than Treasury securities? You can't just pile up money in a vault somewhere. So the government doesn't "borrow" from the Social Security Trust Fund -- the government's debt IS the Social Security Trust Fund.

	The Social Security Trust Fund is not allowed to retain its surplus (how would it? the only stable way to save money is in government debt) nor is it able to sell those securities for any purpose other than covering current expenses. So no, the government can't "pay back" what it "borrowed" either -- all it'd be doing is transferring its debt from the Social Security Trust Fund to the open market.

	Basically, when the Trust Fund was designed, it was understood that for a period of time the Social Security tax would collect more than the program needed to function. So they decided to 'save' the surplus as a legal obligation the US Government has to the program. The expectation now is that the US Government will pay for the program's deficit as long as the Trust Fund holds out -- which is until the '30s or so. This means either transferring the debt to the market, raising revenue, or cutting spending.

	This gives us another 20 years or so to figure out how to adjust Social Security to make its long-run costs match its long-run revenue. To an extent, this happens automatically -- after all, the Baby Boomers aren't going to live forever, and then the much smaller Generation X will be retiring and having their benefits paid by the somewhat larger generations that followed (such as mine). The point of the Trust Fund is to smooth over those troughs. However, we might need to adjust some aspects of the program to keep it solvent. We can increase or eliminate the payroll tax cap, or increase the payroll tax, or add a Social Security tax to other forms of income (like capital gains), or increase the retirement age, or reduce benefits. If we do nothing at all, the last option will automatically take effect: benefits will be reduced.

	In conclusion: ARGH, STOP SAYING THE GOVERNMENT LOOTED THE SOCIAL SECURITY TRUST FUND IT'S NOT TRUE