LA TIMES: Paul Ryan rehashes an old Social Security LIE--at your expense

[Nye Bevan]

8. It is true that the "trust fund" is essentially an accounting fiction.

The excess of Social Security taxes over benefits has been completely spent on other stuff, and the "trust fund" is essentially a giant IOU that the government has written to itself. In the future when benefits payable exceed Social Security taxes that are being paid, the government will need to either (1) raise taxes, (2) borrow money, (3) find savings elsewhere, or (4) print money.

By the way, I support the Social Security program. My intention is not to undermine it but to state economic facts.

These [Trust Fund] balances are available to finance future benefit payments and other Trust Fund expenditures – but only in a bookkeeping sense.... They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures. The existence of large Trust Fund balances, therefore, does not, by itself, have any impact on the Government’s ability to pay benefits. (from FY 2000 Budget, Analytical Perspectives, p. 337)

http://en.wikipedia.org/wiki/Social_Security_Trust_Fund