In addition to leading The Seniors Center, Dan Perrin has become one of the most popular experts on Information-sharing website Quora, where he answers questions from the general public about Social Security, Healthcare, and other issues important to Senior Citizens. He recently answered a reader’s question, “Where did all the Social Security trust fund money go?“
When Congress saw that big pot of money in the Social Security Trust Fund, they got greedy and couldn’t keep their hands off of it. They spent every last dime…and replaced it with a filing cabinet full of IOU’s.
How much does the Federal Government owe the Social Security Trust Fund?
$2.85 Trillion Dollars. That’s right, TRILLION.
So how did this happen?
Well, the Federal Government has borrowed money from the Social Security Trust Fund ever since it was created.
But it it got really bad in the mid 1980s.
To their credit, in 1983, President Ronald Reagan and Speaker of the House Tip O’Neill agreed that they needed to take action if the fund was going to be able to cover the Federal Government’s Social Security obligations to the baby boomers when their generation hit retirement age.
To cover this, they decided to increase Payroll taxes and create a large surplus in the fund, so it could meet these responsibilities. It was a great plan and would have worked.
Unfortunately, politicians in Washington have always seen this surplus as a cash cow.
They have raided it to the point where and there is currently nothing left, except the filing cabinet full of non-negotiable bonds that I mentioned before, which is sitting at the Bureau of Public Debt in Parkersburg, West Virginia.
And to make matters worse, the Government is “paying” the interest on these bonds by taking out even more bonds.
Both parties are at fault, despite playing the blame game and pointing fingers at each other. The truth is each one is as guilty as the other.
Will the money ever be paid back?
The only way the Federal Government can repay its growing 2.85 trillion-dollar debt to the Social Security Trust Fund is by increasing taxes or dramatically reducing its spending.
Senator Mike Enzi summed up the extent of this debacle nicely when he described the situation as a “gross financial mismanagement”.
It’s hard to disagree with him.
For more information about the raid on our Social Security Trust Fund,