That is an interesting question; if you believe the far left politicians Social Security is never in jeopardy because there is a trust fund and it is backed by the full faith and credit of the federal government. In addition, it does not affect the deficit according to those same folks.
Will your (our) Social Security checks stop if the federal government can’t spend any more above its debt limit? The correct answer is no…for now at least. The answer you hear in the press depends on which side is trying to scare whom.
First, as of now the receipts (plus interest income) from the Social Security payroll tax are sufficient to cover the current benefits being paid so even if there is no increase in the debt limit, checks can continue. However, when we get to the point (not long from now) when the payments exceed current Social Security total revenue, we may face a different question.
Also, there is still general tax revenue flowing into the government (you did pay your “fair share” did you not?) and Social Security payments, because they are fixed by law, are high on the priority list of payments that will continue even if no additional debt can be incurred for a period of time.
The bottom line is that in 2011 at least, Social Security checks can keep coming.
However, that does not mean there is no problem. Read this short summary from the Social Security Trustees Report.
I find this discussion enlightening don’t you? The very fact that we have to ask whether Social Security can continue to be paid if the federal government can’t keep borrowing should tell us something about the fiscal state of our government. In fact, isn’t it a bit scary that current tax revenue can’t keep all government payments of any kind flowing for any period of time? Every day we spend more than we have.
Politicians, who keep assuring us that there is no problem with Social Security, should start being honest. There is a problem. There is no trust fund other than a considerable amount of paper representing Treasury Bonds that Social Security holds. The proceeds from the purchase of these bonds by has been used to run the government just like the proceeds from the sale of bonds to China, etc. When the Social Security Trust Fund needs to cash in those bonds to pay benefits, where does the Treasury get the cash to give to Social Security? Well, it sells more bonds to someone else and or it prints money.
That’s not a problem? Perhaps not for you and me, but it surely is for our children and grandchildren.
Related articles
- National Debt vs GDP (creditloan.com)
- What you need to know about the Social Security Trust Fund. When going bust is no big deal (according to some people). (quinnscommentary.com)
- The Republicans Will Take Away Your Social Security!!!!! (aleksandreia.wordpress.com)
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