Here is the way it works: All of the revenue received from payroll taxes is immediately converted into non-market, interest bearing T-bills after benefits are paid. In essence, the USG gets the money right away.
On the other hand, the argument is that if they did not issue these T-bills then they would have to borrow the money from someone else like the Chinese. The rationale is that it is better to owe the money to ourselves rather some outsider. However, there is no doubt that Congress finds it far easier to use the trust funds to fund our debt than outside investors who must be persuaded to invest in our T-bills.
Do you really think any of the money “used to buy treasuries” will ever be repaid?
Of course. It is being done now with SS and Medicare, which are running in the red and must redeem some of their T-bills to make up the shortfall. Eventually, unless these programs are reformed, all of the T-bills held by the SSTF and HI Trust fund will be redeemed to make up the funding shortfalls for these programs. Medicare has been running in the red since 2008 and SS since 2010.
I think this mismanagement of the system will be used later to crash the retirement systems and the government will confiscate IRAs and 401ks to “save the system” which will really enslave us in socialism.
A distinct possibility that has already been talked about in academia. The idea is to seize the holdings of all 401ks and give the holders a credit similar to how SS and Medicare have been handled. When you are going bankrupt, you look for money from any source. This country is headed for fiscal disaster and the longer Congress kicks the can down the road, the more painful the solution.
Socialism is the least of our worries. It implies that there is some order and control. I am more concerned about a breakdown in our civil society if the economy crashes and the life savings of most people are wiped out. History is replete with such examples and it can happen here.
You see the laws and manipulating the fund and I see the theft of my future and resources enslavement of the country.
I am explaining to you how the system works, but I am not unaware of the consequences of what will happen if we don't get our fiscal house in order. We need to identify and understand the problem before we can solve it. Again, the entitlement programs are going bust for actuarial reasons, not because the government stole the money. These are Ponzi schemes that benefited those at the top of the pyramid, but there is not enough revenue to pay for those at the bottom of the pyramid. Wait until there are only two workers for every retiree. And these programs are just part of the problem as Medicaid, Obamacare, and food stamps are increasing even faster. The welfare state is unsustainable.