Tuesday, July 5, 2016

Social Security Trust Fund is Already Broke

Very quietly the left has quit talking about the funding problems of the Social Security program.  It is already broke. It has been issuing, quietly and with no fanfare, US treasury bonds to fund current payments.  That will accelerate in the future.

Because of the fuzzy accounting embodied in the notion of a "Social Security Trust Fund," the public is being deliberately mislead into believing that something has been set aside over the years to fund the system.  Nothing has been set aside.  Worse, payroll tax payments in the past have been diverted to pet projects and wasted instead of being preserved to fund future benefits. The amount cited as being held in the SSTF is actually the amount paid in through payroll tax payments and then frivolously spent.  The idea of a Trust Fund is a cruel hoax.

So, forget about the 2030 projections and all of that.  Social Security is already broke in the sense that current payments to recipients require the immediate sale of US treasuries.  Last year, the amount of the shortfall was $ 90 billion.  That number is set to grow astronomically in future years.

Meanwhile, the no-nothings (Hillary Clinton, Bernie Sanders) are advocating increasing benefits to a system that no longer has sufficient cash flow to pay current benefits without surreptitiously selling more newly created US treasury debt to the public.  Politicians, to no one's surprise, remain silent on this obvious funding disaster.

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