TTSR, Picture Of The “Trust Fund”

Comments on The Thomas Sowell Reader, Picture Of The “Trust Fund”, pages 78-79.

As I start working for a salary, it will be expected of me to pay part of my earnings into the government’s allusion of a Trust Fund.  A Trust Fund that has been collecting taxes for over thirty years, yet it no longer exists.  There may be a system, a safe, and records of taxes as a reporter from the Kiplinger’s magazine proved, but over the years the system has been dissolved.

The first Trust fund in 1980^[1] took taxed money and kept it safe in the form of security bonds until pensions were due.  Then they sold some of those bonds to pay for the government retirement benefits.

The present system still buys security bonds in the Treasury Department, but there are certain advantages that the government has allowed in.  Advantages like allowing the securities held by the Social Security system not to be counted as part of the national debt, because it is one government agency owing money to another.  This means the government can take money out of the Trust Fund to cover costs other than retirement benefits and give back an I.O.U.  An I.O.U. that they never intend on paying because it does not count as debt.  This is not a once in a lifetime or even a rare occurrence.  The government has traded so many security bonds that they are having to use new tax funds before they are turned into bonds to cover the costs of retirees.

What is left in the trust fund for the future retirees and the upcoming baby boomers, whose pensions are scheduled to cost trillions?  A mire promise.  The treasury securities are nothing more than claims against future revenues of taxes.  Therefore there is no Trust Fund.  The days of buying bonds are past and the goal of saving taxed money from ones youth until old age is no longer a priority.  There will be no government funds to trust in the future.

[1] "Presidential Statements Jimmy Carter". Ssa.gov. Retrieved 2011-09-28.