I haven’t read the entire article, but it gets off to such a dumb start I just quit. Here are a few facts:
1. Over the years the SS Trust Fund did build up a $2.6 trillion surplus when SS FICA receipts exceeded what was paid out currently to SS recipients.
2. The government started spending that money in the 1960s and there is nothing in the Trust Fund but non-negotiable, promissory notes from the US government adding up to the $2.6 trillion.
3. But, here’s where the article starts off all wrong: SS monthly benefits are not paid out of the Trust Fund, but out of current month/year collections of FICA tax tax.
4. The current year collections were always adequate until 2010, when they fell $30 - 40 billion short.
5. But still, this year, SS is being paid largely out of current FICA taxes with the government making up some shortfall about like 2010.
The current year receipts are there to pay SS benefits, it’s just whether the feds use those receipts to pay SS recipients, or play games and do something else with it.
Not so.
The idea here is basically correct. However, this statement is usually joined to a second statement to the effect that this principle was violated by subsequent Administrations. However, there has never been any change in the way the Social Security program is financed or the way that Social Security payroll taxes are used by the federal government.
The Social Security Trust Fund was created in 1939 as part of the Amendments enacted in that year. From its inception, the Trust Fund has always worked the same way. The Social Security Trust Fund has never been "put into the general fund of the government."
Most likely this myth comes from a confusion between the financing of the Social Security program and the way the Social Security Trust Fund is treated in federal budget accounting. Starting in 1969 (due to action by the Johnson Administration in 1968) the transactions to the Trust Fund were included in what is known as the "unified budget." This means that every function of the federal government is included in a single budget. This is sometimes described by saying that the Social Security Trust Funds are "on-budget." This budget treatment of the Social Security Trust Fund continued until 1990 when the Trust Funds were again taken "off-budget." This means only that they are shown as a separate account in the federal budget. But whether the Trust Funds are "on-budget" or "off-budget" is primarily a question of accounting practices--it has no affect on the actual operations of the Trust Fund itself.
3. But, here’s where the article starts off all wrong: SS monthly benefits are not paid out of the Trust Fund, but out of current month/year collections of FICA tax tax.
Actually the payroll tax revenue for SS is deposited into the SSTF, which then makes the payments. Any "surplus" is deposited into the Treasury, which issues non-market, interest bearing T-bills in the amount of the surplus and deposits them into the SSTF.
4. The current year collections were always adequate until 2010, when they fell $30 - 40 billion short.
If you recall, Reagan made his famous deal on SS with Tip O'Neill in 1983 that raised the retirement age for full benefits from 65 to 67, increased taxes, and forced all new employees joining the federal government to be under SS. It was supposed to make SS "solvent" for the next 75 years. It didn't work.
Here is what was promised in 1964 during the Johnson administration, from the SSA’s own website...
http://www.ssa.gov/history/ssa/usa1964-2.html
Self-Supporting
“The program is designed so that contributions plus interest on the investments of the social security trust funds will be sufficient to meet all of the costs of benefits and administration, now and into the indefinite future—without any subsidy from the general funds of the Government. Both the Congress and the Executive Branch, regardless of political party in power, have scrupulously provided in advance for full financing of all liberalizations in the program.”
And here is where YOUR money really went. Read and weep.
http://www.socialsecurity.gov/OACT/ProgData/fundFAQ.html#n4