Talk:Social Security Trust Fund: Difference between revisions

The purpose of articles in wikipedia is to provide reliable information to anyone with a question. It is not for news stories. Therefore, the paragraph that begins, "this week, the president..." For that to be appropriate for an article here, the president would be repeating the same speech each and every week.

To ensure that the articles are reliable, wikipedia relies primarily on peer reviewers and editors that insist that original sources be provided for every significant point. Given sources, editors can seek to provide appropriate balance and tone if you aren't sure how to do so. And readers can verify the article by referring to the original sources cited.

This is not the forum for advancing points of view. Just the facts, please. Mulp 06:33, 12 January 2007 (UTC)[reply]

This statement is incorrect. First of all government securities are marketable assets, and second it is perfectly legal for a company to invest its pension funds in government securities.

Unlike private pension funds, the Social Security Trust Fund does not hold any marketable assets to secure workers' paid-in contributions. The Social Security Trust Fund "invests" surpluses in United States Treasury bonds and U.S. securities backed "by the full faith and credit of the government".

:Practically speaking, the federal government has used the Social Security Trust Fund in a way which would be illegal for any private-sector company to do - in order to help balance the federal budget, the government has borrowed money from the Trust Fund to pay current operating expenses and replaced those funds with government IOU's --- This "correction" is incorrect. It would not be "perfectly legal" for a company to "invest" its pension funds in its own securities - whether they were marketable or not. Corporate execs go to jail for that sort of chicanery.

"All securities held by the trust funds are backed by the full faith and credit of the United States Government, as required by law. Those currently held by the OASI Trust Fund are special issues (i.e., securities sold only to the trust funds)" http://www.ssa.gov/OACT/TR/TR03/III_cyoper.html You can not buy or sell these special issues on the market. The insert in the main article from the 2000 budget is absolutely correct. Once the social security taxes fall below the retirement insurance requirements (2015?), other taxes or government debt or reduced federal spending in other areas will be required to meet the entitlements of the social security recipients. There is no money as we understand it in any US Government trust fund. Lamar White lamarw@easystreet.com

Most U.S. government bonds are marketable, but the ones held in the Social Security Trust fund are not. The two statements above are correct. I do have a problem with the bolded portion though and feel the whole second paragraph should be deleted outright. I'd make the changes myself but I'd probably come under attack from some wacko who sees this as an attack on his political ideology, ingores the facts, and revert my good-faith edit. Wiki was great starting out but too many overzealous conservatives and liberals alike will modify or revert articles on political issues in order to fit their own agenda.

While I appreciate the emotion that many feel on this topic, wikipedia is not a debating forum where opposing views are argued, nor a forum for publishing original research or analysis. While points of view can be presented, these must be those of others, with appropriate citations, and with opposing positions of similar stature given equal credence. (Btw, I have been considering many of the claims made, and I believe that the assumptions, and solutions proposed are deeply flawed, merely moving problem from one place to another without eliminating it and without fixing the problem identified. However, much as I would like, this is not the forum to present my analysis.) Mulp 06:20, 12 January 2007 (UTC)[reply]

I was intending to categorize this article, but can't figure out the appropriate category? Should it be USA government, Economics ??? Would be good if someone stamp some category down there. gathima 16:01, 18 Jun 2005 (UTC)

There is NO Social Security Trust Fund. Any politician who says otherwise is lying. Gore actually had a good idea about that "lockbox." Username:BRivera

The "Is the Trust Fund Real" (economic perspective) lacked any sources whatsoever. As Wikipedia's Verifiability policy explicitly states:

The threshold for inclusion in Wikipedia is verifiability, not truth. "Verifiable" in this context means that any reader should be able to check that material added to Wikipedia has already been published by a reliable source. Editors should provide a reliable source for material that is challenged or likely to be challenged, or it may be removed.

If the analysis that section offered was accurate, then finding many reliable sources from the field of economics to document it should be easy. If the analysis was, instead, the conclusion of its contributors, then it was original research and should remain deleted.
- Kelly Ramsey 21:10, 9 February 2007 (UTC)[reply]

This is pretty basic economics, and I didn't think it was likely to be challenged. If you review the cited paper, it supports and is entirely consistent with what I wrote. (If you're not at a University, I think you're going to have to get some friend who is to download the paper for you.) From the paper, "Despite this success in building up the assets of the trust funds, it is not at all obvious that the intended intergenerational burden sharing will take place. In order for the trust funds to actually assist future generations of workers, they must increase national saving, presumably by raising government saving." The paper then proceeds to show that government spending rose in response to trust fund revenues combined with the Unified Budget and therefore national savings was not increased. -- Mgunn 21:50, 9 February 2007 (UTC)[reply]

Being an economist, you think the only reason for the trust fund argument is whether there are any savings effects,... if you were a lawyer you would realize that the SSA needs authority to pay benefits when receipts fall short causing the giovt top borrrow. The xiatnmice of a positive bvalcnce allows such borrowings. When he Truist Fubnd runs out, the authority ends Chivista 21:54, 9 February 2007 (UTC)[reply]

That's why the section has (economic perspective) in the title. I agree that legally, the Social Security trust fund is very real. The economic question is whether baby boomers have been saving for their own retirement (through the trust fund). This is the subject of debate in the economics profession, but a significant body of evidence points to increased government spending and/or income tax cuts because of the trust fund, and therefore the money wasn't saved. -- Mgunn 22:04, 9 February 2007 (UTC)[reply]

With all due respect, unless a quotable source for the discussion of the analogy to bank deposits exists, that entire discussion should be removed, both because without citation it is unsubstantiated opinion, and because it is itself faulty. The trust fund is mostly smoke and mirrors with respect to funding because its assets consist of IOUs written by the government to itself.

To indulge in the vice of analogy myself, if I earn $100, write an IOU to myself for $100, and then spend $100 on current operating costs, my net worth is $0, not $100, notwithstanding that I continue to own an asset - my IOU - with a face value of $100. For that IOU to be satisfied other than by cancellation, the funds must come from my future income; in the case of social security, that means higher taxes. The trust fund is an accounting artifact with little economic substance. See, e.g., Daniel Shaviro, Making Sense of Social Security Reform, the University of Chicago Press, 2000.Tisias 02:45, 24 April 2007 (UTC)[reply]

You are exactly correct. - Mgunn (talk) 19:29, 25 December 2007 (UTC)[reply]

Re: "A faulty analogy is sometimes made with an individual who deposits $1000 of his salary into a bank account but then applies to the same bank for a $1000 loan to buy a plasma TV. The analogy with Social Security falls apart because Social Security has never borrowed against its own assets to spend on other programs." - The analogy isn't faulty, at least not for the reason you say it is. The federal government is lending money to itself. It is the equivalent of the person who deposits $1000 and then borrows and spends $1000, not the Social Security Administration in isolation. Its not the best or clearest analogy, but I'll provide another one. If I take $100 from my left pocket, and put it in my right pocket, than I write an IOU (Left pocket, IOU $100, sincerely, right pocket). It doesn't make much sense to talk about the IOU as an asset. Even if the right pocket pays interest on the IOU (making it more like a loan or bond) it still isn't a real asset, because my "left pocket account" and my "right pocket account" are part of my overall financial situation, they aren't really separate entities. Similarly the Social Security Administration is part of the federal government. The feds can create any number of organizations and accounts, but moving cash from one to the other doesn't improve its balance sheet. Twfowler 23:04, 7 November 2007 (UTC)[reply]

I agree completely that the IOU itself doesn't mean much. To fair though, the important thing is the big picture. To sort of continue your analogy, imagine: (1) Your left hand gets $100 and puts it in your left pocket. (2) You transfer $100 from your left pocket to your right pocket and place a $100 IOU in your left pocket and (3) Your right hand spends $100. Does the IOU in your left pocket represent savings of $100? The answer is COMPLETELY determined by whether your right hand would have spent the $100 anyway.

If your right hand would have spent the money anyway, you as a person are now $0 in debt instead of $100 in debt because of the revenue you got from your left hand. In some sense, the $100 IOU signifies that you are $100 less in debt because of what your left hand was doing. On the other hand, if your right hand wouldn't have spent the $100 if it didn't have it, then the $100 of revenue your left hand got wasn't saved... it was spent. Your total assets is the same ($0) whether your left hand got the $100 or not, and the IOU represents nothing. -Mgunn (talk) 19:29, 25 December 2007 (UTC)[reply]

The question really comes down to, does additional government revenue increase spending... When tax revenues go up, does the government spend more money in response. If the answer is yes, then the trust fund doesn't represent savings. Mgunn (talk) 19:29, 25 December 2007 (UTC)[reply]

For Wikipedia's purposes, the question really comes down to what factual assertions can be made based on reliable sources, and what opinions can be reported on by being attributed to prominent spokespersons. This section, as it now stands, is too heavy on dogmatic assertion and too light on citation. JamesMLane t c 20:47, 25 December 2007 (UTC)[reply]

Have you bothered to read the Samwick, Feldstein, Shoven, Greenspan, and Orszag citations? What are your assertions based upon? 67.120.192.172 (talk) 21:22, 25 December 2007 (UTC)[reply]

The real problem with the SS Trust Fund is not its existence but how it's invested. The special-issue Treasury Bonds in which the TF is now invested returned 5.5% in interest earnings to the TF in 2005. The Social Security Administration is essentially giving TF money to the Treasury to cover the National Debt. When the special-issue bonds expire, they are simply rolled over to a new issue. This is an irresponsible way of investing Trust Fund money. The SSA could get better rates of return on TF investment by buying municipal or corporate bonds. Moving TF investment into the private sector would provide stimulus for the national economy and make money available for growth. It would inject liquidity into the TF where none exists now. It would also remove any question as to the actual existence of the Trust Fund.

Sooner or later, the Federal Government must begin paying down the National Debt. The stability of the Dollar demands it. When SSA begins seeing a shortfall in FICA funding, it will have no recourse but to begin cashing its Treasury Bonds. It would much better to adopt a program of regular bond retirement than to wait for a day of reckoning. Virgil H. Soule (talk) 08:57, 25 September 2008 (UTC)[reply]

The SSA is just a wing of the federal government. If the SSA invests in an external asset, then the rest of the government will have to cut spending or raise even more debt. The probability of slashing spending is up for debate, but if debt increases, then the federal government is essentially borrowing more debt so that one of its arms can invest in external investments. That's like you mortaging your house so you can buy investments. How much sense does that make? Novasource (talk) 03:40, 26 October 2008 (UTC)[reply]

When describing the Social Security Trust Fund, we must be careful to describe it as it is.

Since it holds no true assets, it makes no sense to call it a "fund" except when referring to its proper name. I have seen nothing to lead me to believe it is anything other than an accounting scheme.

If GM's Chevrolet Division borrows and spends money from GM's Pontiac Division, is there any true fund? No. Same with Social Security when other branches of the federal government spend Social Security's surpluses.

Novasource (talk) 03:36, 26 October 2008 (UTC)[reply]