MORE SS RESEARCH: Despite the term “trust,” the Social Security system contains nothing that remotely resembles the common law trust. There is no segregation of assets, no equitable property rights, no private right of enforcement (all characteristics of the common law trust). It is merely a system of taxation and appropriation sprinkled with trust terms to hide its true nature.18 Moreover, Social Security’s Trust Fund does not operate as a trust fund does. Social Security revenues go into the Treasury’s general fund and are automatically credited to the Trust Fund in the form of Treasury bonds. The Treasury pays Social Security benefits and administrative outlays out of general revenue and debits the Trust Fund an equivalent value of bonds. Any leftover Social Security revenue finances general government operations, with an equivalent value of bonds remaining in the Trust Fund as Social Security’s “surplus;” to cover any revenue shortfalls.19 This is how a Treasury account, not a trust fund, works. And calling a Treasury account a “trust fund” to influence public opinion does not make it one. In all respects, then, Social Security’s Trust Fund is bogus. The adoption of the label “trust fund” for what was in fact a Treasury account was intended to cash in on the public’s understanding of this term—that assets are absolutely safe, invested on one’s behalf, and held for one’s future use—and to reassure the public that Social Security was sound and trustworthy. It worked. The reserve controversy disappeared. Over the following decades, Social Security continued to make public-relations capital out of the term by repeatedly telling the public that benefits are paid out of a trust fund built up from their tax payments. fee.org/the_freeman/detail/the-myth-of-the-social-security-trust-fund
Posted on: Sat, 09 Aug 2014 20:22:31 +0000