Re:America’s entitlement programmes are rapidly approaching ...
by jfengel on Wednesday April 19, 2023 @04:48PM
(#35633148)
The lockbox is an accounting fiction, in the same way that centrifugal force is a fiction. It's a way of viewing things.
They fiction is a Social Security Trust Fund. It has its own source of funding, via payroll taxes. But it had more funds than it needed, so they "invested" it in US government bonds, where they were used for the general budget.
That stopped in 2019, when outflows exceeded income, and they started selling rather than buying those bonds.
Eventually those bonds will run out, and when they do, they won't be able to pay Social Security checks. They could choose to pay them out of the general fund, but that would require a law to be passed allowing it. And that would mean money coming from somewhere -- possibly more bonds issued to the general public.
As you say, those bonds are pretty popular, and the US government performs perfectly well at a "loss". But it does mean that Congress will have to act -- and if there's one thing we know Congress hates, it's doing things, especially if those things might be seen as a benefit to one side or another.
They fiction is a Social Security Trust Fund. It has its own source of funding, via payroll taxes. But it had more funds than it needed, so they "invested" it in US government bonds, where they were used for the general budget.
That stopped in 2019, when outflows exceeded income, and they started selling rather than buying those bonds.
Eventually those bonds will run out, and when they do, they won't be able to pay Social Security checks. They could choose to pay them out of the general fund, but that would require a law to be passed allowing it. And that would mean money coming from somewhere -- possibly more bonds issued to the general public.
As you say, those bonds are pretty popular, and the US government performs perfectly well at a "loss". But it does mean that Congress will have to act -- and if there's one thing we know Congress hates, it's doing things, especially if those things might be seen as a benefit to one side or another.