On 8/3/2011 7:37 PM, HeyBub wrote:
Leon wrote:

But in real life if the government is using your SS contributions to
run the government it is a tax. The past weeks threat of missed SS
payment checks would never have been a second thought if that fund
was a separate entity not mixed in with the general fund. Today the
SS fund is simply another Government liability account. Than you
Prez Clinton.

It IS a separate fund. Funds received by SSA go into a pile called the
Social Security Trust Fund. Those funds are prudently invested in U.S.
Treasury bonds (which pay interest). The governors of the SS Trust Fund can
redeem these bonds anytime they wish.

Today, there is about $2 trillion in the Social Security Trust Fund - in the
form of U.S. Treasury Bonds.


All true, however:

The trust fund only contains the surplus collections from over the
years. The rest of the collections are paid out to recipient and for
overhead.

The interest is paid with more bonds.

The surplus taxes collected (that $2 trillion) was spent after the
federal government traded it for the Bonds and plunked it into the
general fund.

When SS needs to redeem the bonds because of deficits (which happened in
2010 to the tune of $49 billion), the feds need to get the money from
their only sources of money - either from the general fund with new tax
money (which they didn't have), print it (resulting in inflation which
goes by the name of qualatative easing) or borrow (which they had to do
last year and this). $4 billion of the cashed in bonds (interest) and
the additional $45 billion was borrowed and now became public debt
rather than the intragovernmental debt in the fund.

So, every dollar in the trust fund is a dollar of national debt.

In all, there are around 150 federal trust funds holding close to $5
trillion of debt.