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 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.
The FY 2000 budget put the issue very clearly:
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. Source: FY 2000 Budget, Analytical Perspectives, p. 337
Board of Trustees of the Social Security Trust Fund The Board of Trustees is made up of 6 members. 4 are automatically members because of the office they hold in the Federal Government. These 4 are:
Two additional members are appointed by the President and confirmed by the Senate to serve 4-year terms.
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