Monday, August 23, 2010

More On Why Social Security Will NOT Go Bust

The Daily Howler has been doing some posts lately analyzing the various incorrect but extremely widespread rumors alleging that Social Security will fall apart.

Here are the relevant posts, Part 1, Part 2, and Part 3

Here's one statement to be noted (from Part 2):
Second con—after the trust fund is gone: On the other hand, people have heard that Social Security will “go broke” or “go bankrupt” once the trust fund expires in 2037 (according to current projections). For most people, these terms suggest some sort of cataclysmic collapse, after which the Social Security system would have to be shuttered. Presumably, this explains why so many people, for so many years, have seemed to assume that they will never draw any benefits.

There's more in the links.


  1. There is no trust fund. There never was a trust fund. It was always one big lie. That is all. Just one BIG LIE

  2. I am glad you mentioned that idea.

    "The use of the trust fund (the use of those annual surpluses) has proceeded just as Reagan directed."

    That was from the Daily Howler. It has more on this very topic. I encourage you to take a look and see the other side of the story.

    The US Government has been burrowing a lot of money, and it all gets paid back, as the Daily Howler says,

    "[The US Government] has borrowed money from big Chinese banks, and from many other sources. You may not like the fact of this borrowing, but this borrowing has occurred. And guess what? The money all gets paid back! No one will ever tell those Chinese banks, “Sorry, we can’t pay you back. The money isn’t there –it’s already been spent!”"

    The Trust fund is working as Reagan directed.

    "The function of the trust fund: Alas! While it’s easy to explain the long-term situation, the short-term situation has long been confused by claims about Social Security’s trust fund. People have heard, for many years, that the trust fund is “just an accounting fiction.” (The money isn’t there—it’s already been spent!) ...

    "The use of the trust find has proceeded exactly as Reagan directed. No one came along after the fact and pulled any tricks. Congress has “invested these surpluses into…U.S. Treasury securities,” in precisely the way the program was designed."

    As has been discussed previously on this blog government debt is not like private debt which you and I must pay off, because government is the source of money. It is made by the government. It is only when debts are in another currency that governments go bankrupt. (Greece has the Euro which is controlled by the European Central Bank, not Greece. Argentina's currency was linked to the US dollar and that caused it to default. These two examples do not apply to the US government.)