Having now gotten up to speed on the US Government Budget, here is what ot understand about the Federal Debt and the Social Security “Trust Fund” stored away in the “Lock Box” (and smaller trust funds like the Highway and Airport trust funds)<\/p>\n
That “Lock Box” contains about $4.5 trillion in special issue US Government Securities issued by the U.S. Treasury.\u00a0<\/p>\n
The total of all US Treasury Debt outstanding is around $15 trillion.\u00a0\u00a0 About $10 Trillion of that is real debt – that\u00a0the US Treasury has to pay interest on\u00a0each year – that will cost about $240 billion in\u00a02011 (suggesting the average rate is around\u00a02.4%)\u00a0\u00a0\u00a0<\/p>\n
The $5 Trillion in the trust funds is not “real\u00a0debt” and requires no payment from the\u00a0Treasury.\u00a0\u00a0 The $140 billion\u00a0in interest to the “trust fund” is\u00a0just\u00a0money the government owes itself.\u00a0\u00a0\u00a0 The US Treasury\u00a0merely adds\u00a0another IOU for $140 billion into the trust fund lock box and doesn’t count that in the budget or the deficit –\u00a0as it isn’t actually an “expenditure” – until of course, the\u00a0Social Security administration needs more money than it has coming in, at which point Social Security becomes a net expense to the government.<\/p>\n
When you hear the politicians saying “Hey, the Social Security trust fund is solvent”, they’re counting those extra IOUs in the trust fund as “income”, even though they aren’t real dollars.\u00a0\u00a0 The balance paid in by taxpayers is dropping by about $50 billion a year, being replaced by those new IOUs – almost all of that is a deficit being run by the Disability benefits, which are essentially unfunded and draining out the IOUs of the Retirement fund<\/p>\n","protected":false},"excerpt":{"rendered":"
Having now gotten up to speed on the US Government Budget, here is what ot understand about the Federal Debt and the Social Security “Trust Fund” stored away in the “Lock Box” (and smaller trust funds like the Highway and … Continue reading