(12-19-2024, 06:42 PM)homebiscuit Wrote:

(12-19-2024, 06:19 PM)The Real Marty Wrote: I think that "borrowing" from the Social Security Trust Fund is because the SS Trust Fund is required to invest all their cash in US government bonds.  The reason was because that was considered the safest investment.   So it's nothing nefarious.  It's just following the rules that were set out for the SS Trust Fund.  The US government hasn't stolen anything from the trust fund.  The trust fund is holding US government bonds.

Honest question because I don't fully understand the bureaucratic financial machinations involved. Why is it said that SS will go broke in so many years? Is it because government bonds are of decreasing value?

It is because the reserves built up in the 70s and 80s are being depleted.  SS ran a surplus, invested that mostly in government bonds, and now it runs a deficit.  When the trust fund is depleted, the new money coming in will be less than the money obligated to go out.  At that point the system will be "broke".  It will still pay out based on whatever it gets each month.  One estimate I remember seeing was about $0.70 on the dollar.  More likely, Congress will "spend" i e. direct Treasury to issue new debt, to make up the difference.  That will be very inflationary.  Those are the two scenarios that might play out that day.  It won't be a fun day, but not the end of the world either.

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