The Social Security surplus contributions continue to be spent.

Never heard with the endless talk about "protecting Social Security" are suggestions for the ending of the surplus Social Security contributions being moved to the general fund and spent by Congress. Every Social Security contribution, past and present has been spent and is gone. In place of this money are government bonds, the Social Security "Trust Fund." A government bond is nothing more than a promise by the government to collect money from future taxpayers. Not even the federal government can spend and save the same money. The spent money is gone. When determining the solvency of the Social Security system the government bonds are erroneously used. The only money in the Social Security system are the current contributions as they pass through being spent. This Ponzi Scheme has only survived because its victims are mandated by law to participate. Any fix to the Social Security system should begin with the ending of the surplus contributions being spent, the only way to do this is to allow participants to own their own accounts and be able to invest a portion of their contributions in real, actual investments. Please feel free to tell me where I am wrong.

Watch this magic trick carefully:

https://www.ssa.gov/oact/progdata/specialissues.html

“The trust funds now hold only special issues”

So what are these “special issues”?

Follow the pea while I move my hands quickly:

https://crsreports.congress.gov/product/pdf/IF/IF10564

“Section 201 of the Social Security Act (42 U.S.C. §401)
requires the managing trustee of the Social Security trust
funds (the Secretary of the Treasury) to invest Social
Security tax revenues in special “nonmarketable” federal
public-debt obligations called special issues”

In other words—Ponzi scheme.

“”I am led to believe that currently the Social Security contributions coming in to the system are greater than the cost going out in benefit checks and administrative costs.””

I wonder....I don’t know how that could be refuted..

Administrative costs could always rise - thanks to whoever is in charge - thus, those costs could eat up any surplus. If what you say is true, how long will it be before THEY figure that out? “Gee, the cost of administering those funds just overwhelms us.”

Are we jaded - skeptical? You bet and why wouldn’t we be? Our government has proven to be untrustworthy!!!! It’s not the way some or perhaps MOST of us at FR started out in life. We listened - now we are finding out that we’ve always been lied to - but probably not to the extent as we are now....

Thank you for that. You’re apparently more in tune with the nitty gritty of the investment of SS funds than I am...I DO know that it could be changed if Congress would do their jobs for the American people and change it. Letting us use our own contributions for investment makes more sense than anything the government comes up with. I guess THEY are looking out for us as we’re not smart enough to take care of ourselves - besides we might spend too much money buying lottery tickets - can’t have that!

“Any idea when the change happened?”

Good question—at least partially since 1985—this is mentioned in passing in this article:

https://rollcall.com/2023/03/02/obscure-law-contains-debt-limit-escape-hatch-for-social-security/

These scam artists are very sneaky.

Thanks, TYR. See cbgb's post 61 enlightening us about "special issue" treasuries sold only to the SS fund. That's a new wrinkle on top of what I posted.

Also, don't make too much about my statement of China being the largest foreign owner of U.S. treasuries. Every now and then China sells some and Japan buys some making Japan the largest foreign debt holder, then they swap places back. It's probably best to think of China and Japan always tying for first place as our largest foreign debt holders.

But for the most part, it's American institutions that own US debt. For most of my life it was the SS fund that had the most. Then with our decade and a half of Quantitative Easing by the Federal Reserve and them increasing their balance sheet, the Fed Reserve became the largest US debt holder. With the recent Quantitative Tapering (reducing the Fed's balance sheet), I wouldn't be surprised if the SS fund is now back to being #1.

And then there's all the state-run pension plans. If you add them all together they are a sizable chunk of US debt holders. Particularly with the PBGC pension insurance regulations (think FDIC for banks, only for pensions) saying only a portion of a pension's investments can be in equities. Given that the PBGC's regulations say that the "safe" portion of pension investments can be in bonds, and since treasury bonds have a better return that savings accounts but are safer than corporate bonds, the federal government is basically saying through the PBGC regulations that state pensions have to have a significant portion of investments in US debt. IMHO, that's the federal government forcing the states to invest in the federal government, which drives up the price of treasuries (lowering treasury rates).

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.