Oregon Magazine

Where is the Social Security Trust Fund, and Why Didn't Hockberg and DeFazio Reveal its Location to the People of Coos Bay?

February 28, 2005 -- Ah, wilderness!  I wrote my first news story in Coos Bay when the world was young and the brick and sand floor of nearby Pony Village Shopping Center rose and fell with the tides.  Tonight, I watched a bastardized report on PBS, one half of which was done by the head OPB/PBS (flaming liberal) flack, Lee Hockberg.  The topic was the wish by the evil profiteers on Wall Street to get their hands on your social security payroll deductions.  Their waffle-brained co-conspirator in the plot is G.W. Bush, who is in their pockets as well as the pockets of Bechtel, the Arab Oil sheiks and the super-rich deacons of the American religious extreme right.  There, on the Coos Bay stage, standing between you and them was U. S. Representative, Peter DeFazio, D-OR.  (Coos Bay is in his congressional district.)

Coos Bay went for G.W. in the 04 general election.  Based on the unbiased comments selected by the unbiased Lee Hockberg of OPB for PBS (Lehrer News Hour), none of them were interested enough in the Bush social security debate to show up at a south coast auditorium.  (That may be true.  I wouldn't show up to listen to DeFazio, either.  To debate, yes.  To listen to, no.  One could spend his time better folding garbage can liners.)

This essay is about part of the crap Hockberg and DeFazio dished out in that PBS report and at that meeting.  But, first read some questions and answers from a government web page.

Does Social Security have dedicated assets invested for my retirement?

Social Security is largely a "pay-as-you-go" system with today's taxpayers paying for the benefits of today's retirees.  Money not needed to pay today's benefits is invested in  special-issue Treasury bonds.

Is there really a Social  Security trust fund?

Yes. Presently, Social Security collects more in taxes than it pays in benefits. The excess is borrowed by the U.S.  Treasury, which in turn issues special-issue Treasury bonds to Social Security. These bonds totaled $1.5 trillion at  the beginning of 2004, and  Social Security receives more than $80 billion annually in interest from them. However, Social Security is still basically a "pay-as-you-go" system as the $1.5 trillion is a small  percent of benefit obligations.

The questions and answers are from a social security faq page.

Yes, of course, the Trust Fund. It's where the current social security payroll deduction surplus goes. (The surplus that  will shrink to nothing a few years from now, and then become an annual and quickly growing deficit which has to be made up by reducing benefits or raising taxes..)  The surpluses have been going there for $1.5 trillion dollars, now.  (Funny how that figure compares so well to what the Democrats call the "cost" or "unfunded liability" of the Bush private account proposal.)

$1.5 trillion of everybody's working paycheck dollars.  And, talk about safe, it's in government savings bonds!

Wait.  There's something wrong here.  I can feel it.

Government savings bonds?  When you buy one of those, who gets the money?  The government?  What does the government do with the money you pay for a government savings bond?  Spend it?  On what?  Oh, of course.  Programs and stuff like that.

So, when you cash in a government bond, where does the government get the money to pay you?  Uh ...

When government borrows from government

Well, that was a little frosty, wasn't it?  Taxpayers provide the money that government uses to pay off government savings bonds.  You pay for the bond when you buy it, then are taxed to provide the money you receive when you cash it in.  That's like robbing from Peter to pay Peter.

And, this social security fund, this $1.5 trillion Trust Fund  that contains special government savings bonds purchased by our payroll deductions -- is that as convoluted, too?  Let's see.  The social security administration is a government agency.  It gets $1.5 trillion from our payroll deductions, then gives it to the U.S. Treasury, another government agency, in trade for government savings bonds which we will be taxed to pay for when they are cashed.

And, in the meantime, Peter DeFazio gets the $1.5 trillion to spend on things like Lee Hockberg's Public Broadcasting System, among other pork barrel projects.  Expensive, depressing public housing projects in Democrat urban districts.  Subsidies for people who dump Christian crosses in jars of urine and call it art.  Subsidies for wretched public school districts with 40% dropout rates.  Subsidies for urban light rail projects which are empty of riders except for gang members and their next victims. 

For this, you buy a bond from yourself, then are taxed to pay yourself back when you cash it in?

The people of Coos Bay voted for Bush?  Not the ones in that auditorium. Including DeFazio and Hockberg, there wasn't a working brain in the place.

George Bush wants to end this government social security financing farce and let people put their own retirement payroll deductions in their own local bank, or one of those index funds like the S&P which all federal workers get to divert part of their payroll deductions to. Anybody who thinks his social security payroll deductions should be invested in government savings bonds that have to be paid for with taxes is crazy.  And anybody who thinks the government can make better use of that $1.5 trillion than even their local, FDIC-guaranteed, totally safe bank is stupid beyond belief.


© 2005 Oregon Magazine