Courtesy of Mish.
Reader Doug is concerned about Social Security. We all should be.
Doug emailed "Most Americans assume that Social Security has money in the bank, so to speak."
He wants to understand the mechanics by which Congress can take Social Security receipts and use them for other purposes.
Specifically, he asked if I would elaborate on something I said in More Government Shutdown Hype. The section Doug asked about is in reference to a hyped-up report How budget showdowns could squeeze the US economy by the Associated Press.
Here is the section that triggered the email:
Q. What about the federal borrowing cap? First of all, what is it?
A. It's a legal limit on how much debt the government can pile up. The government accumulates debt two ways: It borrows money from investors by issuing Treasurys. And it borrows from itself, mostly from Social Security revenue.
Mish: It's important to note there is no social security fund whatsoever. Every penny and then some has been borrowed and spent. Here comes the hype. ….. [click on the top link for my point by point analysis of the hype]
emphasis in red added
No Lock Box
I am not sure what most believe, but anyone who thinks there is a trust fund, a lock box, or money in the bank is way off base. I have commented on this numerous times actually.
Social Security Recap
- April 03, 2009: Social Security: There Is No Trust; There Is No Fund
- January 11, 2013: Social Security Payouts Per Worker; Accrued Interest on Accrued Promises; Imagination
- January 11, 2013: Making Social Security Actuarially Sound in a Business-Friendly Manner
- January 17, 2013: Social Security Cliff in Sight; Retirees Will Outlive Trust Fund; Ramifications of Nonmarketable IOUs and Privatization
…
