Social Security ‘trust fund’ doesn’t exist

Joseph Schillmoeller, Las Vegas

Thursday, Feb. 3, 2011 | 2:01 a.m.

It never ceases to amaze me that we have people in this country who believe that you can take $5 out of your pocket, place an IOU for $5 in that same pocket, spend the $5 and then claim you still have $5 because you have the IOU you wrote to yourself.

Here’s news for people who think Social Security has a “trust fund” — you can’t owe money to yourself and call it an asset. For the second year in a row, the money received from Social Security will not meet the obligations of money going out to beneficiaries.

How does the Social Security Administration make up for this shortfall? By collecting interest on or redeeming the bonds that are in the trust fund. And where does the money come from to redeem the bonds or pay the interest on the bonds? As Sen. Kent Conrad has explained, the money comes from the operating funds of the government, or the Treasury must sell more debt to cover the shortfall.

Thus, there is no trust fund. If the shortfall is $100 billion next year, the Treasury will have to take $100 billion of our 2012 tax dollars to cover the difference or sell more bonds to China. Period.

We need to stop the charade of believing in this nonexistent trust fund and tackle this problem now. If we don’t, millions will retire with empty hands and a fistful of empty promises.