"Trust Fund balances are available to finance future benefits...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 or borrowing." President Bill Clinton in his Analytical Perspectives section of the 2000 budget. "We have no positive assets in the Social Security Trust Fund." Secretary of the Treasury, and one of the trustees, Paul O'Neill, June 19, 2001, at a luncheon speech to the Coalition for American Financial Security in the Sky Room of the World Trade Center and later to Sam Donaldson on This Week. "It holds no real assets. Consequently, it does not generate funds to pay future benefits. These so-called trust fund 'assets' simply reflect the accumulated sum of funds transferred from Social Security over the years to finance other government operations." June O'Neill, former Director of the Congressional Budget Office (CBO) at the CATO Institute's Conference for Women and Social Security. "Government trust funds do not correspond in any meaningful way to those in the private sector. Government trust funds are simply a form of earmarking, accounting mechanisms that record tax receipts, user fees, and other credits and associated expenditures," Barry Anderson of the Congressional Budget Office in testimony before the House Budget Committee, September, 2002. Currently, the Social Security system is running a surplus, taking in more in taxes than it spends on benefits. That surplus is used to purchase government bonds -- the only purpose to which it can be put. The purchase of those bonds generates general revenue for the federal government and that money is spent on the operations of the federal government. That is a bad system, but it is how the trust fund was designed to work. The fund does not hold cash, never has held cash, and was not designed to hold cash. Michael Tanner-CATO 10-16-99 “Pointless Debate Over SS Trust Fund” It is in this role as a savings account that the Trust Fund could fail. It cannot work because it holds no independent assets. Though the Trust Fund is backed by government securities, these have a different meaning than they would for you or me. If I hold a government bond, I have an asset that the government will give me money for or that I can sell at any time. If the government holds a bond, however, its obligation to give itself money is meaningless. The government cannot make these bonds good, as needed in 2014, except by borrowing, reducing other expenditures or taxing citizens. House Budget Committee Chairman Nick Smith 6-8-99 In fact, the money the government has supposedly been putting aside from the Baby Boomers' Social Security taxes is not there. The government has been borrowing the money to pay for the budget deficit. The Social Security Trust Fund is simply IOUs from the U.S. Treasury.... [Social Security] would be fine if the government would stop borrowing the money. Newt Gingrich 4-7-95 The truth is that the Social Security Trust Fund has already been stripped bare. There is no trust and no fund. It is a lot like the S&Ls. The savings and loans had a lot of real estate on the books, a lot of property, a lot of shopping centers, a lot of deposits, and everything else, until you looked inside and found out there was nothing there. The assets were mostly on paper.... Meanwhile, the Social Security cupboard is bare. Senator Ernest “Fritz” Hollings (D-SC) Congressional Record 4-24-91 March 8, 2002, the White House Bulletin contained the following paragraph: "A reporter (unnamed) asked Senate Majority Leader Tom Daschle this morning, 'One of the other things that may have happened before the break is, the Administration's request for an increase in the debt ceiling, which they said, as of their last communication, I think, would be reached by late March when you go out (in recess). Over on the House side, House Republican Chairman Cox has put forward a proposal that I think the leadership is considering to redefine national debt and make it only the publicly held debt, which is, I think, about $3.6 trillion instead of the overall $5.9 trillion. By doing that, it would allow Congress to vote for a reduction in the national debt rather than the $700 ($750) billion increase that the administration supported. Do you support that on a policy basis to redefine national debt as only the debt held by the public and not the intergovernmental (Intragovernmental Holdings) transfers that make up the rest of it?' Dashle brushed off the question. "The Enron case made headlines because fraud and deception of such magnitude is fairly unusual in the corporate world. Washington fraud and deception of a much greater magnitude doesn't make the headlines because fraud and deception in government is standard practice....Washington politicians have for decades been doing precisely what Enron has been accused of doing -- concealing debt with accounting tricks. Congressmen tell us that our Social Security taxes go into a trust fund to pay for future retirement pensions. That is a boldface lie. The Social Security trust fund has no money in it." Walter Williams, Professor of Economics, George Mason University in an article published by the Washington Times April 17, 2002. "First, an immediate and significant reduction in the payroll tax will, more than any other proposal, put money in the hands of those who need it and will spend it -- across the entire income spectrum. It will give both employers and employees more cash as quickly as the next payday, thus relieving financial pressures on both. A just-released Congressional Budget Office study notes that a payroll tax cut 'would probably have a large bang for the buck' because it could induce spending and reach families with lower earnings. This action can be taken without undermining the Social Security Trust Fund or the benefits of current and future retirees." John T. Dillon, CEO of International Paper, in the Washington Post January 11, 2002, Editorial Page. "When the money going out exceeds the money coming in, you are in trouble and that happens in 2016. Those who try to push the fatal date off to 2038 are counting the money that Social Security has in its so-called trust fund. However, the so-called trust fund exists only as a legal technicality, not as an economic reality...you cannot spend and save the same money." Thomas Sowell, The Washington Times, July 29, 2001. "Enron's murky 'off-balance sheet' accounting practices highlighted its assets and downplayed its debts - as does Social Security's 'trust fund' accounting. While the trust fund's trillion dollars in government bonds are 'assets' to Social Security, they are debts to the rest of the government - which will have to raise taxes or cut other programs to repay them, just as if there had been no trust fund at all." Andrew G. Biggs of the CATO Institute for the Washington Times, April 4, 2002. "It means that ordinary working Americans, like teachers, police officers and firefighters, who believe their payroll taxes are going toward their Social Security retirement are in for a surprise...Instead of going to the Social Security trust fund, their payroll contributions are being funneled directly into tax breaks for individuals and corporations" Robert Matsui (D-CA), Chairman House Ways & Means Subcommittee on Social Security, Associated Press, March 30, 2002. "Every dollar collected in (FICA) payroll taxes is spent the very minute, the very hour, the very day it comes in the door ... any funds left over, they are spent on other programs or used to pay off the national debt. But nothing is saved. No money is stashed away in bank vaults; no investments made in real assets." John C. Goodman, President of the National Center for Policy Analysis in an article published by the Washington Times, April 12, 2002. "Any government leader who discusses the Social Security trust fund as if it comprises real financial assets with marketable value isn't worthy of being taken seriously." Jerry Heaster, The Kansas City Star, May 11, 2002. "The trust fund is a mirage of promissory notes." July 25, 2001.