“SS is a pay as you go program. It has been running in the red since 2010, but the shortfall is made up by redeeming some of the IOUs “
We can call it that, but since the Government takes the money coming in, spends it, and gives the SS accounts an IOU, it is simply a fiction. There is no lockbox.
Future payments are based entirely on the Government’s decision to pay or not to pay in the future.
It is that by law. The IOU is a non-maerket, interest bearing T-bill. The USG has the same obligation to redeem it as it does a T-bill held by the Chinese. The SSTF is part of the national debt just like the publicly held debt. The SSTF, the HI Trust Fund, the Federal Government Employee's trust fund, etc. are held in the "Intragovernmental Holdings" portion of the national debt.
By law, SS can only pay out in benefits the amount it has in assets, whether it is in revenue or in the SSTF. When the SSTF cashes in all of its T-bills to make up the shortfalls, benefits must be reduced to the revenue coming in.
There is no lockbox<
Technically, there is. It is called the SSTF. The T-bills in it, just like the T-bills owned by China, are backed by the full faith and credit of the USG to honor them. The reality is that SS is unsustainable due to actuarial reasons--not whether the SSTF contains real assets or not. Given the demographics of an aging society, SS cannot keep providing benefits unless payroll taxes are increased and/or benefits reduced.
Future payments are based entirely on the Government’s decision to pay or not to pay in the future.
It will be based on the government's ability to pay the benefits as outlined in the law that set up SS. It is a pay as you go system and the benefits are tied to revenue collected.
Note: This lockbox crap was started by Al Gore and other know-nothings. Whether there was/is a "lockbox," SS is unsustainable as currently structured.
The real problem with SS now is that the USG must borrow money to redeem the "IOUs" in the SSTF. If the SSTF had been allowed to invest the "surplus" in other kinds of securities other than T-bills, it would be a different story. SS has been a cash cow for the politicians who can use this money without raising taxes. Now SS is a black hole that is sucking money out of the budget and increasing our publicly-held debt.