What's the going-rate for US bonds again, right now? It's like 0.1%, right? And hasn't been above 3% since the early 80s, if I remember right?
Take away the deficit spending, and you take away the safe haven for money to retreat when things start destabilizing in the higher-risk categories. So all the "magical thinking" economics that starts with the assumption that deficit spending is evil and we should have zero deficit? There are consequences beyond the taxpayers paying interest here.
The point is that SS administrators would rather lose a small amount of value than put that giant-ass lump of money into the market. It creates risk, and more importantly, creates a situation where the government is manipulating stock prices with their picks due to the massive size of the trust fund.
Oh, the irony. In an outstanding article about the dangers of magical thinking, the author slips into magical thinking. The power of compounding is indeed truly inexorable. It's also exponential. It doesn't matter how big the economic base is - a 3.5% compound growth rate will always be defeated by a 7% compound interest rate on borrowed money. Or a 5% one. Or even a 4% one. Always. It's just mathematics. The higher rate will always run away from the lower one. At a certain inevitable point, the unit time growth in the higher rate will exceed the growth of the lower rate. In economic terms, that's when all your output goes just to interest payments.
That's not very manageable.