Once again: The Social Security Trust Fund is neither a fiction nor bankrupt. That is a myth. [View all]

[TheWraith]

Since this has been going around, the myth that wouldn't die, I suppose I need to take a few minutes to correct the facts.

There is a widespread belief and claim, pushed by various people for various reasons, that Social Security has had money "borrowed" or "taken" from it by the government to be spent on whatever, and that therefore it's really secretly empty, been stolen, filled with IOUs, or whatever other story you want to spin. Usually this is pushed in the same breath as implying (or outright stating) that both parties are conspiring to kill seniors and that Social Security is a fraud. Despite that, this storyline has found a substantial home on the left, particularly among the "attack the Democrats" faction.

Here's the thing though: This claim is false. It's not "sort of" or "controversial," it's just outright false. Anyone who pushes this claim is either misinformed or outright lying.

This money has not been "stolen" or "spent" simply because it's not all sitting in one giant vault somewhere gathering dust. It has been invested, in the same way that putting your money into a certificate of deposit isn't the bank stealing from you just because that money is no longer sitting in your pocket. Frankly, I expect to hear that kind of ignorant pseudo-sophistry from the Ron Paul types who live off paranoia and a failure to understand monetary policy, but it always annoys me to hear some on the left claiming something not just wrong but blatantly intended to deceive and undermine confidence.

The Social Security Trust Fund currently contains about $2.6 trillion dollars in assets, mostly in the form of US treasury bonds. These investments are there for the same reason that any money is invested anywhere: to produce returns, in this case increasing Social Security revenue through interest. An interest rate of 2.4%, which is the average that the SSTF collected last year, doesn't sound like much... but on $2.6 trillion dollars, that's $63 billion a year extra that's being collected by the Social Security system. Not to mention that if you simply piled cash in a vault, not only would it not grow in value, the SSTF would actually shrink due to inflation. Because of its investments, Social Security is MORE financially sound, not less, and with no substantive risk since it's based on legally binding US treasury bonds. US bonds are, in fact, legally enshrined in the constitution, with the 14th Amendment establishing that their validity "shall not be questioned."

In summary, the claim that the trust fund has been "stolen" or replaced by "IOUs" is patently wrong, akin to saying that if you can't physically see your money sitting in a bank vault it's not there. It's an absurd claim, and one we should put to rest for good.