Kerby Anderson

Earlier this month, the Social Security Board of Trustees released its 2023 report on the financial status of the Social Security Trust Fund, While the report did warn that finances had worsened slightly, news reporters rushed to reassure the public. They claimed that the Trust Fund still has about $2.7 trillion and won’t be depleted until 2033.

Dr. Merrill Matthews asks a troubling question: “Isn’t the Social Security Trust Fund already broke?” He reminds us that the $2.7 trillion exists only on paper. But as I have mentioned for decades on radio, Congress has been borrowing those surplus funds to make the budget deficits look lower. But the only way to repay those funds is to borrow even more money.

Decades ago, when the government collected more in FICA taxes than it needed, the excess was put into the Trust Fund. Those funds were used to purchase special Treasury notes that Congress was free to spend since they were placed in the General Fund.

Now Social Security is spending more than it collects and will need to sell those Treasuries. If the government were operating on a surplus in its General Account, it could merely transfer the funds. But the federal government does not have a surplus and will have to borrow.

But wait, Congress reached its debt limit months ago. The federal government won’t be able to borrow more until Congress agrees to raise the debt ceiling. Until then, the government will have to borrow from other parts of the federal government just to pay Social Security benefits.

We are told that the Trust Fund won’t be depleted until 2033 but must borrow from other parts of the government until the debt limit is increased and then borrow even more once the debt ceiling is past. That doesn’t sound like the Trust Fund has anything but IOUs.