Something I want to address from yesterday, about Social Security.
Traveling Dave said:
"Because politicians keep using the money for all kinds of programs and for people who have never paid into the system. Like spouses and child benefits, disabled persons and on and on. There WAS so much money in the program, they just couldn't help themselves."
It's not just that politicians couldn't help themselves. From day one, the Social Security Act authorized the Managing Trustee (The Secretary of the Treasury) to invest excess funds in the trusts. But it was also baked in that the only investment option available to the Trustee is a special series of Treasury securities. In other words, the only way the Trustee can earn interest for the fund is to lend the money to the federal government. He cannot put it into a bank, he cannot invest it in the stock market, he cannot do anything with the excess except lend it to the federal government.
Of course, the Treasury Secretary is a cabinet appointee, so he's quite happy to do this to support the agenda of the president who appointed him, so when the administration presents or supports legislation that requires funding, one source of funds is the money from the sale of those special Treasury securities to the SS trust funds.
The administration is forbidden by the act from counting the trust funds as part of its budget, but that obviously doesn't stop the administration from using it, nor prevent Congress from instructing the administration to utilize it. And there's another common misconception - people accuse Congress of "pillaging" the funds, but the Congress can't actually do it, they can only recommend to or instruct the administration to do it.
So, it wasn't just opportunism by politicians saying, "Oh look, here's a pot of money we can dip into!" It was designed into the Social Security Act from day 1 that excess from the trust funds would be loaned to the government - and ONLY the government.
The government COULD, conceivably, theoretically, borrow the money and invest it for return. But that doesn't get anyone votes. So pigs will fly before that happens.
Interesting factoid. Gracias.
Replenishing the trust fund will require that a presidential administration make it a priority. They could cut spending elsewhere and pay back the bonds. But cutting spending seemed to go out of fashion at the turn of the century.
Or they can raise taxes, which doesn't tend to make people happy.
Or they can cut benefits, or raise the retirement age, which only manages to slow down the inevitable.
But, again, none of this buys anyone votes or approval ratings. So no one ever wants to do it.
Had the money been placed in an S&P 500 Index Fund the funds would contain a staggering amount of money. But you know what happens when someone suggests that.
