4 ms·

I'm not defending DOGE here but the Social Security "Trust Fund" is more of an accounting gimmick than a real fund. It's not like a regular individual trust fun

by nradov 2y ago

I'm not defending DOGE here but the Social Security "Trust Fund" is more of an accounting gimmick than a real fund. It's not like a regular individual trust fund with a named account beneficiary. Excess Social Security taxes that weren't immediately needed to pay current benefits were used to buy Treasury bonds (or bills). All of the funds are co-mingled. One branch of the government owes money to another branch of government but there are no real assets.

sanderjd 2y ago
Yes, but it's an important accounting gimmick.
amluto 2y ago
By that standard, isn’t any cash I hold in treasuries also an accounting gimmick? Sure, in one case the parties are me and the US Department of the Treasury and in the other case it’s the SSA and the US Department of the Treasury, but I don’t really see how this matters.
- johngladtj 2y ago
  If you issued the treasuries yourself it would be.
  - Aloisius 2y ago
    The government issues money as well.
- s1artibartfast 2y ago
  It is closer to trading cash today for IOUs with your name on it. >Sure, in one case the parties are me and the US Department of the Treasury. It would be the same situation if the DOT taxed you when the T-bills come due. Trade 1$ for a treasury today. Tomorrow get taxed $1.1 and paid back with your own money.
- TheNewsIsHere 2y ago
  It would not be. The Social Security Trust Fund is called that because money is held in trust for the person who paid into it. It’s the same concept as a trust, but essentially at scale for multiple parties.
sundaeofshock 2y ago
Treasury bonds are not real assets? People buy our debt because it is (was?) considered a safe asset.
fencepost 2y ago
Correct, and a great example of this is "Greenspan's Bait and Switch" back in the Reagan years - basically a bunch of measures put in place to increase how much was being paid into FICA (which notably has a cap on how much income it applies to, so it's regressive) and slow outgo. Any overage beyond current needs is put into a "trust fund" which is required by law to be kept in US Treasury Bonds, aka loaned to the US Government. For the truly cynical, think about it as years of loaning a bunch of money to your uncle, and around the time that money starts needing to be paid back your uncle starts looking for contract assassins (aka "privatization"). If Social Security can be killed then oh my! Guess all that money owed to it just doesn't need to be paid back. If the money "borrowed" in that way had been spent in ways that would make providing the services it's for easier and more cost effective that would be one thing, but that's not how it works out because the best ROI for private capital is purchasing politicians and policy.

by nradov 2y ago

sanderjd 2y ago

Yes, but it's an important accounting gimmick.

amluto 2y ago

By that standard, isn’t any cash I hold in treasuries also an accounting gimmick? Sure, in one case the parties are me and the US Department of the Treasury and in the other case it’s the SSA and the US Department of the Treasury, but I don’t really see how this matters.

johngladtj 2y ago
If you issued the treasuries yourself it would be.
- Aloisius 2y ago
  The government issues money as well.
s1artibartfast 2y ago
It is closer to trading cash today for IOUs with your name on it. >Sure, in one case the parties are me and the US Department of the Treasury. It would be the same situation if the DOT taxed you when the T-bills come due. Trade 1$ for a treasury today. Tomorrow get taxed $1.1 and paid back with your own money.
TheNewsIsHere 2y ago
It would not be. The Social Security Trust Fund is called that because money is held in trust for the person who paid into it. It’s the same concept as a trust, but essentially at scale for multiple parties.

sundaeofshock 2y ago

Treasury bonds are not real assets? People buy our debt because it is (was?) considered a safe asset.

fencepost 2y ago

Correct, and a great example of this is "Greenspan's Bait and Switch" back in the Reagan years - basically a bunch of measures put in place to increase how much was being paid into FICA (which notably has a cap on how much income it applies to, so it's regressive) and slow outgo. Any overage beyond current needs is put into a "trust fund" which is required by law to be kept in US Treasury Bonds, aka loaned to the US Government. For the truly cynical, think about it as years of loaning a bunch of money to your uncle, and around the time that money starts needing to be paid back your uncle starts looking for contract assassins (aka "privatization"). If Social Security can be killed then oh my! Guess all that money owed to it just doesn't need to be paid back. If the money "borrowed" in that way had been spent in ways that would make providing the services it's for easier and more cost effective that would be one thing, but that's not how it works out because the best ROI for private capital is purchasing politicians and policy.