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{"id":1697,"date":"2015-04-07T08:19:19","date_gmt":"2015-04-07T14:19:19","guid":{"rendered":"http:\/\/admin.patheos.com\/blogs\/janetheactuary\/?p=1697"},"modified":"2016-08-16T09:55:51","modified_gmt":"2016-08-16T15:55:51","slug":"so-what-about-the-trust-fund-anyway","status":"publish","type":"post","link":"https:\/\/www.patheos.com\/blogs\/janetheactuary\/2015\/04\/so-what-about-the-trust-fund-anyway.html","title":{"rendered":"So what about the Trust Fund, anyway?"},"content":{"rendered":"\n<\/head>

Just wanted to highlight something from my write-up yesterday on Falling Short<\/a>: \u00a0the Social Security Trust Fund.<\/p>\n

Quite some time ago, there were raging debates on the Trust Fund: \u00a0is it real, and, hence, we need only worry about the shortfall in Social Security funds after it is exhausted, many years from now? \u00a0Or is it already spent on other things, and the money is every bit as gone as if Congress were an irresponsible parent breaking into his kid\u2019s piggy bank to buy himself some liquor?<\/p>\n

Mostly, it\u2019s irrelevant.<\/p>\n

Sure, if the Trust Fund had been set up as\u00a0an actual investment fund, as other countries have built up (Japan comes to mind as a fund specifically for its retirement obligations, and of course the oil-rich nations have their Sovereign Wealth funds), then its funds could now be meaningfully used to pay retirement benefits. \u00a0But that wasn\u2019t what happened, of course, which means that the practical effect of the \u201credemption\u201d of the special-issue bonds will be for the federal government to issue more debt, to \u201credeem\u201d the bonds and give the Social Security Administration the cash to cut its checks.<\/p>\n

If the government could just issue as much debt as it pleases, with no ill effects on the economy, then this nothing to worry about. \u00a0But if this were the case, then why are we bothering with any spending restraints at all? \u00a0Heck, let\u2019s double benefits, while we\u2019re at it. \u00a0And, of course, economists can\u2019t\u00a0 truly quantify the impact of the debt level we currently have, or higher or lower levels of debt \u2014 it\u2019s all a matter of the assumptions which you build into your model, and, unlike a laboratory, these models can\u2019t truly be tested and \u201cproven\u201d one way or the other.<\/p>\n

Now, this morning Slate featured a piece<\/a> on prominent Democrats promoting expansion of Social Security. \u00a0 And a month ago I wrote about<\/a> the book Social Security Works<\/em>. \u00a0One of the first steps each of these voices takes, fairly consistently, is to say that we should eliminate the cap in the payroll tax, even as, at the same time, they tell their constituents that they have earned their benefits, fair and square, so that Social Security represent standing on their own two feet.<\/p>\n

The reality is this: \u00a0the Trust Funds, all of them, are accounting methods only, and shouldn\u2019t trap us into looking at any one of these programs \u2014 not Social Security old age benefits, or disability benefits, or Medicare \u2014 in isolation. \u00a0They are government programs like any other, even if they operate under the fiction that they\u2019re funded by \u201cinsurance premiums.\u201d \u00a0 And someday, when I\u2019ve convinced the country of the soundness of the Jane plan for provision for the elderly (sort of a Netherlands\/Australia hybrid), we\u2019ll fund it as part of general government spending.<\/p>\n<\/body><\/html>\n","protected":false},"excerpt":{"rendered":"