Funny Money in the Social Security Trust Fund

Tim Iacono

As if there weren’t enough other pressing issues to occupy the country’s collective mind, Allan Sloan of Fortune Magazine reminds us how “useless” the Social Security Trust Fund is in this story from the other day that included the rather disturbing image shown below.

There’s real money and then there’s funny money — stuff that looks real, but isn’t.

Today, let’s talk about one of the world’s biggest piles of funny money — the $2.54 trillion Social Security trust fund. The trust fund matters now, because Social Security revealed last week that it plans to tap it for $41 billion this year, and will begin tapping it on a regular basis in less than five years.

This year’s cash deficit, the first since the early 1980s and the biggest ever, means the Treasury will have to borrow money to redeem some of the trust fund’s Treasury securities. Even at a time when Uncle Sam is borrowing $1.5 trillion a year to keep his checks from bouncing, $41 billion is real money.

Sloan goes on to note how the money that was supposed to go into the trust fund was spent and how, when Social Security runs a deficit (like this year) it results in new government borrowing regardless of how big the trust fund is because there’s nothing there.

Yes, we’ve got much bigger things to worry about right now…