Is the Social Security Trust Fund technically broke?

Kerby Anderson: Although politicians talk about the Social Security Trust Fund, the reality is that it is neither. There is no trust and there really is no fund. Each Congress has spent the surpluses that were supposed to be set aside for when the baby boom generation began to retire. Economist Kevin Hassett found something else. The surpluses that once fed into this imaginary trust fund are now gone. Due to the current recession the funds are now negative. Payroll receipts are down because fewer people are working. Essentially, the trust fund has gone into the red about 10 years ahead of schedule.

The latest government numbers confirm this. This year it is estimated that Social Security will take in $654 billion dollars in payroll taxes and pay out $662 billion in benefits and expenses. That is a shortfall of $8 billion dollars. Now the response from the Social Security Administration is even though there is a shortfall, Social Security is not running a deficit. It turns out that the interest the government owes itself for borrowing and spending the surpluses will provide an additional revenue stream. So even though there is a shortfall, Social Security isn’t running a deficit, yet.

While all of this is true, some members of Congress are starting to object to this accounting slide of hand, and all this really does is postpone the inevitable. By the next decade the bulk of baby boomers will have begun their retirements. The only way to have been able to fund the millions of boomer retirees will be to have a real trust fund, not a fictitious one. Each year Congress spent the money in the trust fund, and now recession has removed any last pretense of their being money for future retirees.

I don’t think most Americans really care whether the Social Security Trust Fund is technically broke. They just want to know if their Social Security will be there for them. The reality is that each year more retirees will be drawing on funds that aren’t there. For some reason, no one in the administration will tell you the truth. I just did.

I’m Kerby Anderson and that’s my point of view.

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