Social Security or Insecurity?

By Logan McFadden

The Social Security Trust Fund has been used as a pass-through account. The federal government has taken $2.7 trillion for non-Social Security purposes. These funds, viagra needed to pay current and future benefits, were collected through payroll taxes paid by employees and employers. It is widely and erroneously believed that these payroll taxes were used to purchase U.S. Treasury Bonds. In fact, the spent money was replaced with government IOUs, called Special Issues of the Treasury.

The public has been misled about the true nature of these IOUs for the past 30 years. The IOUs are not like the Treasury bonds held by China and other lenders. The IOUs cannot be sold on the open market. They cannot be used to pay benefits. The only way the IOUs have any value is if the government is able and willing to pay back all of the $2.7 trillion.

Representative Marsha Blackburn

If the payroll taxes had been invested in actual Treasury bonds, the government would have added $2.7 trillion to the national debt. The national debt is approximately $18 trillion and counting. By using the IOUs, the national debt is understated by $2.7 trillion. The IOUs simply defer recognition of federal spending until funds are required to pay Social Security benefits. Congresswoman Marsha Blackburn [R-TN] stated at a recent Social Security Working Group meeting organized by the Association of Mature American Citizens (AMAC) that the Social Security fund is currently borrowing 33 cents of every dollar in outlays and that since 2010 it has been paying out more in benefits than in the taxes it collects. Bottom line, the “Trust Fund” redeems IOUs issued by the federal government. As a result of this transaction, it is the federal government that borrows the 33 cents to cover its IOU. The 33 cents not reported on the government’s balance sheet as a liability at the time borrowed funds were used for non-Social Security purposes are now added to the federal deficit.

Representative Blackburn’s bill, the “Savings for Seniors Act”, is a contribution to a comprehensive solution. The measure would prohibit Congress from spending Social Security money on non-Social Security programs. Under her legislation, if Social Security funds are not paying recipients, the money would go into an off-budget account. These funds would be frozen until Congress approves suitable investment vehicles other than the obligations of the U.S. government. AMAC has proposed a comprehensive working document to reform Social Security and extend benefits for at least 80 years. HERE AMAC’s plan does not raise payroll taxes or increase the income cap.

As it stands today, Social Security projects to cover full benefits until 2033. The longer Congress waits to address the ongoing solvency of Social Security, the more difficult it will become to reach a bi-partisan agreement. Please write or call your Representative. The youngest taxpayer deserves to know that payroll taxes paid today will accrue to his or her benefit upon retirement.

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Logan McFadden is a Citizensjournal.us city reporter and a recently retired banker, residing in Camarillo. He volunteers for the Heritage Action Sentinel team and serves as the AMAC Delegate to the 26th Congressional District and a Convention of States District Captain.

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