It’s the time of year when the U.S. Congress deals with the budget, and Social Security and disability insurance are in this area. I have heard different concerns about these programs. Some say Social Security is solvent until 2030, but disability insurance will soon be broke.
I decided to do some checking.
This comes from the 2012 Social Security and Medicare Boards of Trustees report: “Federal law requires that all excess funds be invested in interest-bearing securities backed by the full faith and credit of the United States.”
The Social Security and disability insurance trust funds list trillions of dollars of assets. At the end of 2011, Social Security lists assets of $2.5 trillion and disability has $1.5 billion in assets. However, these assets are held in “special, non-marketable securities of the U.S. government.”
What this means is that there is no cash in these funds, only IOU’s. The government has borrowed all this money to finance its deficit spending. Actually, the government has “intragovernmental holdings” of $4.7 trillion, which means they have borrowed money from other programs. The reason Social Security needs to be reformed is there is not enough money to borrow.
For Social Security to remain solvent, all money needs to be repaid and placed in those interest-bearing accounts and Congress needs to be taken out of the loop. Now I understand why they fight against privatization of Social Security.