Redefining the so called Social Security "PROBLEM"

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Forums > All Posts > Redefining the so called Social Security "PROBLEM"

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2010-10-22 10:03 AM

Schmidt
Colorado Springs, CO
Posts: 1058

We have discussed the Social Security problem in other postings, but I'll start a new thread on this one mainly because Social Security is again in the news and ignorance and distortions are in abundance.

You've heard the old adage that if you owe the bank $10,000 and can't pay, YOU have a problem. But if you owe the bank $1 million and can't pay, the BANK has a problem.

Well the same applies to Social Security. The Social Security Trust Fund has loaned the Federal government $2.54 trillion since it started accumulating surpluses in the year 1983. The government has spent every penny of that and in return has issued the Trust Fund special issue interest bearing bonds. Borrowing from the Trust Fund is expected to increase to $3.7 trillion by 2019. So yes Social Security has a problem, but their problem is how to get back the $3 trillion plus that the government has borrowed from them. It really should be couched as a GOVERNMENT BORROWING problem, but instead politicians and conservative think tanks like the Heritage Foundation make it out as a social welfare problem going bust. Not true.

The Social Security Trustees Report indicates that "annual OASDI income, including interest on trust fund assets, will exceed annual costs, and trust fund assets will increase every year until 2025. At that time it will be necessary to begin drawing down trust fund assets to cover part of expenditures until assets are exhausted in 2037. After trust fund exhaustion, continuing tax income would be sufficient to pay 78 percent of scheduled benefits in 2037 and 75 percent in 2084."

So why are we in a panic about a date 27 years in the future when economic forecasts are so precarious anyway? If a fix is needed for SS in 2037 why must we do it now in a panic instead of a few years before that "dooms day date." A fix at that time would be relatively easy...just a tweak of the cap and/or an adjustment on the retirement age.

The real resaon it is being couched as a SS Problem and in need of a fix now is that the rich would just as soon not have to dip into that Trust Fund now or ever. Cashing in the special interest bonds after 2025 means a corresponding burden on the general taxation fund...mostly income and capital gains taxes. Remember income taxes are progressive and hit all levels of income. SS payroll taxes with a cap are regressive and disproportionately affect the poor and middle class.

That's not to suggest that we should ignore the problem entirely as it is true that paying both Social Security and Medicare benefits payments will be a significant burden on our young in the years beyond 2020. But don't blame the Social Security program. It's designed surplus over the past few decades has functioned pretty much as designed. The problem has been that government has borrowed those funds and doesn't have a realistic plan for paying those funds back without raising income taxes. And that is a non-starter for conservatives. They absolutely hate the thought of having to raise income taxes to pay off the debt of the borrowed funds from the SS Trust Funds. So instead they distort the message and put fear into the populace about SS going bankrupt. It bull puckey!!!

2011-01-08 12:47 PM

LLBarry
Beverly, MA
Posts: 299

While the media and right wing politicians are attempting to portray Social Security as a big entitlement to be cut, they never mention that trillions of the paper SS surplus was spent by Congress and used as a slush fund to wage wars, build roads, pay for tax cuts, schools, fund corporate pork, and to provide a disproportionate benefit to the wealthiest of Americans because they paid the least (if any) into the fund. Working Americans (along with a match from employers) paid the payroll tax which was a significant percent of their income. The wealthiest Americans, and those who have their primary income from investments, paid little if anything especially as a percent of income into Social Security. Now that the surplus cash cow paid for by working Americans is no longer available, the elite that used and benefited from it now wish to cut the benefit side.

Or am I looking at this wrong?

2011-01-11 05:48 PM

indianacarnie
Jeffersonville, IN
Posts: 77

No you are seeing it very clearly. Republicans cant stand Social Security for the simple fact that its "big government" that works! Works for the people it was intended to work for, the average American. because it IS "big government" and it DOES work its a very bitter pill to swallow for their "philosophy" of states rights/small government. They must work hard to make it seem like it does not work and they are ruthless about going about that.
The brazenness of their lies, their utter contempt for the truth and what their "truth" will mean to millions of Americans put them in a class by themselves. They most definitely have read "Mein Kampf", "repeat the lie long enough and loud enough and you will sway the masses".

2011-01-13 09:41 PM

CARLITOS BAM-BAM
Dallas, TX
Posts: 897

I'm gonna have to disagree with you. If Social Security is Big Government....then the National Security state is Big Super Death Star Government....and the Republicons have no problem with it....and they have no problem using the government to protect corporate interests from litigation....or using government economic intervention on behalf of their own personal economic interests.

Whose the party of Small Government, again?

Social Security is a safety net...a bulwark against the chaos of poverty, which is a latent threat to everyone's liberty....and wealth.
The Social Security Administration doesn't even employ a whole lot of people; it doesn't have to, it's a transfer system....funds are collected by employers and distributed by the SSA. And recipients spend the money.

2011-01-13 11:37 PM

CARLITOS BAM-BAM
Dallas, TX
Posts: 897

Look, economically, this country is so far to the right that the Democrats are more conservative than the British Conservative Party and the center-right governments of Merkel and Sarkozy.
IF America's Conservatives and Republicans don't want big government, well tell them to stop demanding bombs we don't need and to stop filling our prisons and clogging our justice system with minor drug offenders; and stop making laws that take away due process, the 5th Amendment, and equal protection; and stop aiding and abetting the deceptive behind-the-scenes capture of regulatory agencies by the corporations that they are supposed to regulate....and stop allowing corporations to override the will of state governments, who Republicons claim to defend.
Oh.. and stop calling Obamacare Big Government too...a regulated marketplace with incentives for participation, ie the health care exchanges and the individual mandate...was a Bob Dole-Orin Hatch-Chuck Grassely Republican Idea...that we Democrats have improved upon...and I'll be damned before I concede that a public option is big government, when it's a matter of choice and paid for by those that choose it. Am I getting through to anyone? We're Through the Looking Glass! Get With It! This is 2011!

I'm Afraid of Americans

2011-01-14 06:47 PM

Schmidt
Colorado Springs, CO
Posts: 1058

We covered some of this in other postings, but I'll chime in and rehash a few previous remarks anyway. First every thing negative that you have heard about the patron Saint of Republicans, Ronald Reagan, probably has some truth behind it, but I'll admit that some of the stories have been embelished over time. I'll try stick to the points that I know are factual. In his first inaugural address on January 20, 1981 he first used his "credo":.."Government is not the solution to our problem. Government is the problem." That credo defined his Presidency and that of every Republican President and every Republican "wanna be" for President right up to the present.

Other related terms and phrases caught hold over the years...BIG GOVERNMENT... government takeover...SOCIALISM...and blah, blah, blah. However, EPK is right to point out that Reagan and the conservatives that followed in his footsteps didn't totally trash "big government." When it came to the military and war, you couldn't find friendlier big government suck-ups. On the Vietnam War, Reagan had this to say: "We're at war with the most dangerous enemy that has ever faced mankind in his long climb from the swamp to the stars, and it's been said if we lose that war, and in so doing lose this way of freedom of ours, history will record with the greatest astonishment that those who had the most to lose did the least to prevent its happening."

When not promoting war and freedom, or not scheming about Iran-Contra, Reagan was the typical anti-intellectual "hands-off" Republican that we on the left so easily stereotype. After his death in 2004, Joe Conason of Salon said this of him: "Yet it should be possible to eulogize rather than mythologize the 40th president and his times -- to acknowledge the skill, charm and commitment, without indulging in a sentimental revisionism that erases the historical reality of the 1980s."

"His naive faith in the private sector's capacity to regulate itself, along with his disdain for many of the necessary functions of the modern state, allowed cronies and crooks to flourish. Inept government, corrupt government and cynical government became severe problems during his tenure, leaving fiscal wreckage that remained for many years after he returned to private life." Quoting journalist Haynes Johnson, "By the end of his term, 138 Reagan administration officials had been convicted, had been indicted, or had been the subject of official investigations for official misconduct and/or criminal violations."

One of those Ronald Reagan "mythologies" was that he saved Social Security. If he indeed saved Social Security, why are we today debating the same issues that we debated 30 years ago? Ronald Reagan at heart hated all government social programs. He labeled single mothers with children "welfare queens." And he hated taxes..."I have only one thing to say to the tax increasers: Go ahead, make my day." Yet when it came to "saving Social Security" he did just that...increased payroll taxes. But as LLBarry pointed out above, this wasn't just any tax...it was a tax increase that primarily affected the poor and middle class...a regressive tax...designed so that the rich wouldn't have to cough up a higher share of progressive income taxes.

And what do we have to show for it now? A so called Trust Fund valued today at $2.54 trillion but all in the form of special issue bonds that are not redeemeable except as Congress decides. Since those funds were "borrowed" by the General Fund they should ideally be paid back out of the General Fund, but instead we have a Congress that is talking about cutting Social Security benefits or increasing payroll taxes...but not touching the General Fund.

Yes Ronald Ragan also cut income taxes and capital gains taxes, but part of those taxes were paid for by the increase in the regressive payroll taxes for Social Security. And while his apostles have heralded the growth in corporate profits that those tax cuts generated, they ignore the fact that those tax cuts resulted in a tripling of our national debt. "I am not worried about the deficit. It is big enough to take care of itself." -- Ronald Reagan

"You know, Paul, Reagan proved deficits don't matter," -- Dick Cheney

Republicans don't worry about deficits...except when Democrats are in charge.

I got off topic here a bit...the topic is Social Security, but it's one that hits my hot button every time politicians politicize it and media are too dumb to challenge them.

2011-01-16 10:17 PM

CARLITOS BAM-BAM
Dallas, TX
Posts: 897

The hypocrisy of Republicans and their slanderous use of anti-Big Government rhetoric surpasses just military matters, crime, and morality, which most people recognize, but deep into the realm of economics...in ways that most people don't realize.
Reagan crushed Unions, and used government regulatory power to allow corporations to run rough-shed over States' Rights as well, while practicing one-eyed Keyensianism, exploding government debt, and subsidizing Wall Street. At every turn, the move was not towards smaller government, but tyrannical government, as Reagan brought home the practice of putting corporate profits before the people. A government that backs corporate theft of individual liberty is by definition not small. It's huge. And that's how Wall Street wants it; they want a Big Government that serves their interests.

Now, I hold the neoliberal wing of the Democratic Party in similar regard, but at least these guys know how to balance accounts.

2011-01-27 11:11 PM

Schmidt
Colorado Springs, CO
Posts: 1058

I was watching the local Fox station this evening and once again they hit my hot button. Essentially they said Social Security is in trouble, and if your are in your 20s or 30s, "you won't see a dime of all the money you put into social security," and that "Social Security will dry up by 2037." That is outright fear mongering and a LIE. What he didn't say is that when the Trust Fund is exhausted in 2037 and if everything else remains EXACTLY as predicted, in the year 2037 benefits to retirees will be reduced to 78 percent of what they were receiving before 2037.

This means that for someone that has earned the maximum credits from a lifetime of working, their monthly check in 2011 dollars will be reduced from $3,140/month to $2,449/month (78 percent). Yes that's a big hit, but it is considerably more than "not seeing a dime."

Prior to 1983 Social Security was on a "pay as you go" basis (PAYGO)...that is the Social Security receipts and benefits were largely balanced each year, but required some minor adjustments. Effectively the so called Trust Fund was kept near zero each year...no surplus. Not a big deal, except that Republicans hated to be seen regularly voting to increase taxes to cover any minor deficits.

So in 1983 Reagan and Greenspan pushed through the revisions to the Social Security Act that created a deliberate payroll tax surplus...a surplus that was used to keep progressive income taxes lower. If they had done absolutely nothing, Social Security would have gotten along just fine, and with lower payroll taxes because there was no need for a surplus. Here's what the last 10 years of surplus payments actually look like:

Social Security Funds Allocations, Last 10 Years
	Annual	Annual	Annual	Annual	Annual	Annual	Annual	Annual	Cumulative
Year	Tax Collected	Benefits Pd	Expenses	Other Costs	Total Costs	Surplus	Bond Interest	Surplus + Int	Trust Fund
	$ million	$ million	$ million	$ million	$ million	$ million	$ million	$ million	$ million

2000	503,962	407,635	3,788	3,698	415,121	88,841	64,471	153,312	1,049,445
2001	529,108	431,931	3,702	3,282	438,915	90,193	72,895	163,088	1,212,533
2002	546,723	453,821	4,185	3,647	461,653	85,070	80,362	165,432	1,377,965
2003	546,960	470,778	4,562	3,747	479,087	67,873	84,926	152,799	1,530,764
2004	568,743	493,263	4,536	3,844	501,643	67,100	88,975	156,075	1,686,839
2005	607,506	520,748	5,272	3,917	529,937	77,569	94,252	171,821	1,858,660
2006	642,453	546,238	5,337	3,846	555,421	87,032	102,420	189,452	2,048,112
2007	674,713	584,939	5,542	4,020	594,501	80,212	110,176	190,388	2,238,500
2008	689,001	615,344	5,749	4,050	625,143	63,858	116,301	180,159	2,418,658
2009	689,141	675,482	6,182	4,137	685,801	3,340	118,349	121,689	2,540,348

Totals	5,998,310	5,200,179	48,855	38,188	5,287,222	711,088	933,127	1,644,215	2,540,348

Pct of Taxes	100.0%	86.69%	0.81%	0.64%	88.15%	11.85%	15.56%	27.41%
Source: http://www.ssa.gov/OACT/STATS/table4a3.html

That last column is expected to continue to grow with interest to $3.77 trillion by 2019. From 2019 until 2037 the Trust Fund will be drawn down. At 2037 the fund will once again revert to PAYGO.

To avoid taking the 22 percent reduction in benefits in 2037, Congress has several fixes that they could make at that time...the most popular being increasing the maximum annual taxable earnings cap, currently set at $106,800/year. If they do that, the $3,140/monthly benefit would go unchanged. Republicans HATE that idea.

Social Security has been politicized by fear mongering and ignorance.

I share this stuff because I hope readers will take the time to understand rather than listen to the politicians lie. Look at the numbers and think about them.

2011-01-28 06:51 PM

CARLITOS BAM-BAM
Dallas, TX
Posts: 897

Great stuff as always.....

Republicans have fucked up Social Security...through unifing the federal budget by using annual social security surpluses to offset supply-side tax cuts.....which have not facilitated the pace of economic expansion required to pay off the IOUs w/ interest that they swapped for the excess social security payroll taxes, which would cover the solvency of social security through the baby boomer retirement years through near mid-century, without any changes to the system, and beyond that to infinity with marginally reduced payouts, but with a more than likely chance to return to annual surpluses by next century.....But only by raising tax revenues through a combination of higher taxes and economic expansion, or through deficit spending can the government honor it's obligations to the Trust Fund, once Social Security has gone in the red, which is approaching early because of the energy-security-foreign policy-energy(again)-housing-financial megacrisis known as the Bush II years. whew!
.......................................

Social Security is the finest administrative government program to date. And it is an honor to pay into such a magnificient system, created by people with such brilliant long term vision that has and will continue to preserve THE CORE and help it secure the blessings of the American Dream, so long as Democrats now stand and rise to deliver on intergrated public policy strokes for the sake of the preservation of the middle class in defiance of what hell may come from Republican-fascism.

Reporting from The Edge and for the American Dream,
this is El Prezidente Kaboom. Good day.

2011-01-30 09:19 AM

Schmidt
Colorado Springs, CO
Posts: 1058

Yes Kaboom you are right to point out that the Trust Fund going into the red is approaching early. Looking at the 2009 numbers in the table above, one can easily see that the surplus for that year is small compared to the previous years. The numbers for 2010 and 2011 will be worse...in the red. But the Social Security gurus that put out these projections see it getting back to surpluses for a while once the effects of the recession are over. Then going back in the red a few years later, drawing on the Trust Fund until it is extinguished in 2037.

As I have said in other postings, I am sketical of all long term economic forecast such as this. We tend to take them as gospel, but they have a lot of subjectivity. I have read these and the CBO reports for years and the numbers seem to move all over the place depending on what the current economic climate is and not what it is expected to be 20 years hence.

But it is this "tapping into the Trust Fund" this year and next year that has got the naysayers going again, fear mongering at their very best to promote privatizing social security. What those people never, ever bring up is how they can divert funds from current payroll taxes to a pay for a private social security fund without making the existing system go even further into the red. When the money paid out as benefits exceeds that coming in from payroll taxes, the difference has to be made up from the General Fund...the regular income taxes. The Trust Fund is not a stash of printed money "under the mattress." Every penny has been spent...it was designed that way by Congress...and Greenspan/Reagan left it that way when they increased payroll taxes in 1983.

Nevertheless, one must realize that Social Security and Medicare will be an extra burden on our younger taxpayers for the next 30 years, and with families now being much smaller than that of my generation, the baby boomer generation, the ratio of workers supporting retirees on Social Security and Medicare will continually decline and remain low until all of us baby generation retirees die off. It is an honest intellectual debate that we should be having, but that debate has been lost in the fear mongering and politicization of the issue. That's why I keep bringing this topic up to hopefully educate people rather than falling for the Republican spin.

The Social Security Trust Fund and the Medicare Trust Fund have provided us with a false sense of security. It is money that has been borrowed by the government...it is a part of the larger national debt. Yes the government has to honor those obligations, but it will place an additional burden on the current young generation of workers. How do we solve that problem...the government borrowing problem?

2011-02-03 07:12 AM

CARLITOS BAM-BAM
Dallas, TX
Posts: 897

The problem with the Social Security Trust Fund is (was) what to do with it.....

The money has (had) to be put somewhere.....and under the mattress is (was) not an option.

It seems the government has (had) two options.....invest the money..and/or use it to help the economy grow. But when you throw income taxes in the equation for the latter, economic growth has (had) to not only make up for the interest and the principle on the bonds held by Social Security, but also the tax revenues lost from the rate cut, in order for the government to cover what it owes to Social Security without raising taxes, deficit spending (borrowing), or sovereign credit (printing money).

More later....

2011-02-03 07:39 PM

CARLITOS BAM-BAM
Dallas, TX
Posts: 897

As far as investing the Trust Fund is concerned. Well that's a bit tricky. Obviously, there's inherent risks that come with investments....or any private financial product used to gain or store value. As we all know, the Stock Market goes up and down, commodities are seasonal and wavy...and inflation is a silent killer.....but what if government could create protected savings accounts in private institutions at an inflation busting rate for social security surplus deposits? You know a real trust fund...with a 4-5% annual yield.

Now look...I'm a little out there and I'm not an economist. I'm not some wannabe guru with answers; I'm just speculating....but for the life of me, I can't understand why we need so much private banking for the sake of personal loans. A computer can ascertain an individuals respective credit risks in a matter of seconds...but it takes more investigation when investing in commercial ventures, so it's not like I'm totally against private banking....but collectively it seems we would get a better deal on mortgages, car loans, school loans, and personal loans if government was in charge of these affairs. Look how much government has to do to prop up private lending in the marketplace....You wouldn't have 30 year mortgages without massive government intervention in the form of subsidies, government insurance, and the various Fed directed facilities used to grease the wheels of the credit industry. Why shouldn't government go all the way via direct lending to the public?

The great spirit of the Bull Moose is haunting me....

"We stand at Armageddon, and we battle for the Lord." -T.R.

2011-02-06 08:17 AM

Schmidt
Colorado Springs, CO
Posts: 1058

Kaboom raises several good points here. First regarding the investment of Social Security Trust Fund surpluses, the annual surpluses in the next decade will be relatively small. The Trust Fund is growing primarily because of the interest on the special issue bonds (similar to the government bonds we buy, except they can't be marketed), but the actual surplus funds (difference between tax revenues and benefits paid) will actually be near zero or in the red for 2010, 2011 and maybe 2012 depending on the economy, and then as more baby boomers elect to retire in the next decade, the surplus each year will not be sustained anywhere near the 2000 - 2008 levels above.

That average bond interest PAID right now for 2010 and 2011 is quite good because it includes bonds that were issued in years past when interest rates were higher. The new special interst bonds being issued this year will have very low interest rates.

Back in 1983 when Greenspan and Reagan "saved" Social Security there certainly were private investment and other options for investing the huge surplus funds projected over the next several decades. The price of gold at the end of 1983 was $382 per ounce. The price today is $1,349 per ounce. The Dow Jones index was 1258. Today it is 12092. I personally think that some combination of these investments would most likely have beaten the bond interest, even despite the ups and downs of the market and commodities. However, it was never a serious consideration. Why? In my opinion, the attraction to the anti-tax, anti-Social Security Ronald Reagan was that by continuing to allow the surplus payroll taxes to go directly into the General Fund, it shifted more of the tax burden from the rich to the middle class. Higher regressive payroll taxes in return for lower progressive income tax. That's a trade that even Reagan could like...just package and sell it as "saving Social Security with a Trust Fund" and any fool will buy it.

But getting back to Kaboom's other point about government direct lending to the public. Yes a case can be made for that as well. Obama already did it by changing the student loan program where the banks acted as middlemen skimming off their take while the government took all the risk. And Medicare...the government administrative cost is just 1.3 percent of total expenditures. Find a private insurance company that can operate profitably with that small of an administrative expense. United Healthcare paid its CEO $102 million in compensation last year...and those other junior execs weren't hurting either. Just think of the cost savings to the tax payer if we had a "Medicare for all" program.

Another of Kaboom's points regards the government guarantees on various private lending and deposits...from mortgages (Freddie Mae and Freddie Mac) to our FDIC insured deposits. All those defaulted home mortgages are largely being made whole by us tax payers. Banks are still going under and all of our deposits are "safe" because of the FDIC. The banks speculate and the FDIC (i.e. tax payer) takes the risk. So the question to ponder is: What would happen to bank deposits and lending if there were NO government guarantees whatsoever...a true free market without government regulations, but with the financial institutions taking 100 percent of the risk? I don't have the answer...but I'm sure the plutocrats would hesitate...you know those fat cat oligarchs that scream about "socialism" but want government to take all the risk.

And if government doesn't have to absorb losses from reckless bank investments, then they could take the money saved and directly lend it to the public...just like they are now doing with student loans. Makes sense to me. It takes out the "middle man" that skims off gigantic profits. This wouldn't shutdown the banks...they could still compete for the same business, but without their safety cushion. How would that work?

I'm not necessarily advocating this course of action, but trying to stimulate critical thinking of the way we do business in our capitalist society. Thoughts?

2011-02-06 11:51 AM

CARLITOS BAM-BAM
Dallas, TX
Posts: 897

Investing the Trust Fund in the stock-market is (was) a political non-starter....

To Reagan's team and Greenspan, unifying the federal budget and using the Trust Fund to offset high marginal taxcuts was a win-win. Social Security would be paid back by the economic growth resulting from the tax-cuts, while the government's debt load would be spread from privately held bonds and treasuries to include intergovernmental held debt, which affords the government greater financial flexibility should something go wrong. After all, the government also controls how much Social Security spends, which allows it to borrow more from itself.

Unfortunately, this all gave way to a steroidal one-eyed Keyensianism interrupted only briefly by President Clinton. Marginal-tax cuts never came round to balance the budget through economic expansion. The government just continued to borrow more and more, with every attempt at belt-tightening followed by recession prompting more spending to keep the economy afloat. Regulatory disaster after disaster has resulted in tax payer funded bailout after bailout. And while war after war has been paid for with deficit spending, the stock market has been turned into a casino with robots doing the majority of the trading.

We have built a fascist corporate economy dominated by a global elite. The neos (neo-conservatives and neo-liberals) have taken over.

2011-02-07 08:31 AM

Schmidt
Colorado Springs, CO
Posts: 1058

Kaboom made an interesting point about how the Social Security and Medicare Trust Funds spread the government's debt load from privately held bonds and treasuries (the stuff the American citizens...and Chinese, Japanese and other foreign governments hold) to intergovernmental held debt, which affords the government greater financial flexibility should "something go wrong." Well that "something" could be upon us soon if Congress chooses not to raise the debt ceiling. See the discussion under the forum posting, What happens if Congress doesn't raise the debt ceiling? In that posting, I linked to a Real Politics article by Josh Borro, Debt Limit Impasse Could Drag on for Months .

Here is one of the options to keep government from defaulting that Borro discussed (but I didn't cover in my posting):

"The most financially promising of those options would be to "disinvest" government trust funds that hold Treasury debt, most principally the Social Security Trust Fund. Essentially, the trust funds would redeem bonds they hold ahead of schedule, in exchange for a promise to be paid back later -- and such an IOU would not count against the debt limit. Because the trust fund balances exceed $2.5 trillion, this tactic could be used to run the government for several years without hitting the debt limit.

"This tactic works because the debt limit applies to gross debt, including trust fund holdings, which are debts the federal government owes to itself. The government's true indebtedness is better reflected by net debt, also called Debt Held by the Public. By reducing the amount of debt that the government owes to itself, the federal government can grow the net debt while staying within the gross debt cap.

"The Reagan Administration used this tactic during a budget standoff in 1985; while the AARP sued to block the raid on the Social Security Trust Fund, their suit was dismissed. However, Reagan used the proceeds of the raid to pay current Social Security benefits, and it may not be legal to raid the funds to pay for general operations of government. A raid would also be politically fraught; while the Social Security Trust Fund is an accounting fiction, most Social Security beneficiaries don't see it that way."

Those Trust Funds have sure served our politicians well. The fact that Reagan used the above tactic so soon after creating the payroll tax surplus Trust Fund shows that his administration had thought about this possible future option when they set it up. However, back then the Trust Fund balance was relatively small. Messing with it now could be a political hot potato even though, as Borro stated, the "Social Security Trust Fund is an accounting fiction." I like that description.

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