How come the government can take money out of Social Security and spend it?

[jonesw03]

We pay Social Security so we can get a retirement and etc. How come the government can dip into it without penalty. Shouldn't it be locked for what it's supposed to be used for only? The government is going after businesses why are they able to do the same thing others are getting punished for?

[GoGo Girls]

Because Jimmy Carter put social security into the general fund to balance the budget and its been used as the politicians petty cash drawer ever since.

[Cesc]

That is not exactly how it works, but anyway, you may call it stealing.

[B.Kevorkian]

The idea of getting the same money you put into SS back out has never been valid. As a pay-as-you-go ponzi scheme, SS has long used it's current, regressive, tax reciepts to fund it's current retirees. The fiction that collecting even more money and 'saving' some of it would somehow make the burden of later payouts less is just that, a fiction. Consumption by future retirees will come out of future production, the burden is the same whether the money sits in a lock box or is invested. Actually, it's worse if it isn't invested, since investment now can increase future production.

What the government does is 'invest' the SS fund in government bonds. That means there will be more money in the fund, later, because it recieves the interest from those bonds. That money, though, comes out of the general fund, so, in reality, what's happenign isn't that SS is being raided, it's that future tax revenues are being raided to keep SS solvent.

[PIRATE]

They call it "borrowing"

[Crash]

it used actually be a separate fund, Lyndon Johnson was the first president to borrow from it to pay for his great society programs & the viet nam war. he was only able to do this because he had a congress & senate controled by his own party. after that there was no way to pay it back with out greatly increasing taxes so everyone after him just continued to use as a general fund. now its such a large part of the governments income that we would have to shut down all gov. programs for at least 2 years to pay it back so they just use taxes to pay the interest on the loan & nothing on the principal

[BekindtoAnimals22]

Good point. I believe this began under George H.W. Bush and has not been discontinued since. They just send out the checks to the recipients and put the rest of the money in the general fund while they tell us Social Security is going broke.

[Scott L]

Would you rather they borrow even MORE money and make the debt that much larger?

Besides the Social Security Trust Fund is still there, the rest of the government services just "borrowed" the money. But you should see how much our debt is when you factor that in.

The deficit is shrinking right now but it will explode soon, Social Security still makes a surplus, which will end in 2019 as predicted today (it was predicted to change in 2020 last year. I can't wait personally, because the poo will finally hit the fan and we might actually have some meaningful debate because the US public won't accept raising the tax rate by 100% across the board (doubling taxes).

[igi]

crooked

[jeeper_peeper321]

OK, lets kill the myth.

Just where would you want the federal government to keep all the excess SS revenue ?

Should they invest it in the stock market ? And maybe lose it all if the market crashed?

Hide it in mattress's ?

All excess SS revenue is used to purchase US Treasury Bonds.

The same bonds anyone Else is allowed to invest in.

The government doesn't dip in the SS revenue, they don't borrow from it.

The government just doesn't treat the income generated from the excess SS revenue's purchase of US Treasuries, any different than they do any other kind of revenue.

But, just as the federal government must redeem US Treasuries that have matured, they have to redeem the US Treasuries that were purchased with excess SS revenue.

Right now, the US government has about 3 trillion dollars worth of Treasury bonds from excess SS revenue.

These treasury bonds will be cashed in and used to keep paying full SS benefits starting around 2017, when there no longer are any excess SS revenues, because we will be paying out more in SS benefits than we collect in SS tax revenue.

When SS started, there were 15 people paying into SS for every person collecting benefits, today there are 5 people paying in for every person collecting benefits.

In another 20 years, there will be 3 people paying into SS, for every person collecting SS benefits.

That is because people are living about 25 years longer now, than they did back in the 1930's.

So for a answer to your question,

All excess SS revenue, is invested,

It is invested in US Treasury Bonds instead of the stock market.