Liberty Maven

First, a definition is in order:

Trust Fund: Government funds that are designated by law as trust funds (regardless of any other meaning of that term). Trust funds display the revenues, offsetting receipts or offsetting collections, and outlays that result from implementation of the law that designated the fund as a trust fund. The federal government has more than 200 trust funds. The largest and best known finance major benefit programs (including Social Security and Medicare) and infrastructure spending (the Highway and the Airport and Airway Trust Funds). [source]

Did you know that the Social Security Trust Fund is a misnomer?

By definition the assets of a trust fund are held in trust, meaning that the funds will be available when needed. As a 36 year old, there will be nothing left of this trust fund that I’ve been paying into all of my working life. So I cannot “trust” it at all and neither can most of you.

Following the State of the Union in 2005 George Bush said the following regarding the Social Security Trust Fund:

Some in our country think that Social Security is a trust fund — in other words, there’s a pile of money being accumulated. That’s just simply not true. The money — payroll taxes going into the Social Security are spent. They’re spent on benefits and they’re spent on government programs. There is no trust. [source]

And if that isn’t enough to convince you then the following is from the Office Of Management and Budget, the largest office within the Executive Office of the President of the United States (EOP):

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. (from FY 2000 Budget, Analytical Perspectives, p. 337)

This news was a bit of a shock to me. So this further shows that the Social Security trust fund is not a trust fund at all.

If that isn’t enough, did you know that when calculating the yearly budget Social Security is included as government revenue? I guess that is not so shocking after reading the preceeding quotes. Money that is removed from your paycheck against your will (in the form of Social Security/Medicare) is not just being used to fund those programs. The remaining amount is being spent by the federal government on other governmental functions that have nothing to do with Social Security.

If it were truly a trust fund, that remaining money would not be spent. If we are to truly calculate the yearly federal budget, Social Security should not be included in the calculation.

In 2000, Bill Clinton happily announced that we had a federal budget surplus of “at least $230 billion”. This was noble in theory, but if we are to deduct Social Security from the calculations then we actually had a budget deficit of $417 billion. [source]

And by using that same reasoning and data, in 2006 our budget deficit was approximately $1.2 trillion.

This is a great example of how the government can mislead the public if the public is not monitoring it. Of course, the public is too busy discussing Paris Hilton and Britney Spears to be bothered.

I’d like to take this a bit deeper and ask why do we allow the government to impose these welfare taxes to begin with? Is it because American’s are altruistic? Perhaps, but I contend that if Social Security never existed we’d be in much better financial shape today.

So why not work to phase it out for those dependent on it now while allowing younger workers to invest that money or spend it as they see fit. Not only will that solve the Social Security problem, but it will help the economy as well.

Judging by the way the economy is going, that would be welcomed with open arms. So which candidate for President would fix this problem? There’s only one: Ron Paul.