The Clinton Administration
"These [trust fund] balances are available to finance future benefit payments and other trust fund expenditures-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, borrowing from the public, or reducing benefits or other expenditures. The existence of large trust fund balances, therefore, does not, by itself, have any impact on the Government's ability to pay benefits.
FY 2000 Budget, Analytic Perspectives, p. 337
The Social Security Administration (SSA)
"We are not accumulating a true fund and are instead merely accumulating a right to future government revenues. The expected trust fund buildup will not (1) lower future costs, (2) lower total future taxes, or (3) generate faster economic growth… Under these circumstances, the public is, at the minimum, gaining a false impression about the ability to prepare in advance for the financial effects of the baby boom's retirement."
Memo to American Academy of Actuaries, published in the Social Security Trustee's Report, March 30, 1988.
"…there will be no 'real' trust fund available to be tapped decades from now … redeeming trust fund securities to pay benefits is only an intermediate accounting step – in practice, the cash is obtained from current tax revenues or borrowing. Current surpluses, together with the trust-fund accounting structure, service to place an important claim on future government revenue. But in the more relevant area of actually obtaining cash to pay promised benefits in the future, the trust funds accomplish nothing directly."
Steven F. McKay, Office of the Actuary, Social Security Administration, February 6, 1990.
The Congressional Budget Office (CBO)
"Although government trust funds arguably have some value as an accounting mechanism, their projected solvency does nothing to ensure that economic resources are available to cover program costs."
The federal government's trust funds, including Social Security, are not trust funds in the usual sense but accounting mechanisms. They record the income from Social Security taxes, the expenditures for Social Security benefits, and interest that accrues on the difference. Private trust funds preserve assets for future use. Government trust funds do not do that because the government does not have financial assets to preserve. On the contrary, it currently owes the public $3.6 trillion. The government's ability to pay Social Security benefits depends ultimately on the total financial resources of the government--not on the balances attributed to the trust funds.
CBO Director Dan L. Crippen, testimony before the House Ways and Means Committee, November 9, 1999
"The federal government's trust funds are not trust funds in the traditional sense; that is, they do not set aside current income for future use. Excess income over outgo for any given trust fund is invested, in a certain sense, in special Treasury securities, which are as safe and secure as all other Treasury debt. But the Treasury securities held by federal trust funds are nothing more than the government's IOUs to itself. Look at it this way: if the government had truly invested trust fund net income for future use, the Treasury would currently be holding hundreds of billions of dollars of real assets that could be liquidated in the future to pay for future obligations. But the Treasury does not hold any net assets; in fact, all that remains from the so-called investment of trust fund surpluses is net debt to the public of $3.7 trillion."
"Although there is no money in the Treasury to pay for future obligations, the obligations to people eligible for Social Security benefits are real. And most important, those obligations are a direct result of federal law, not a consequence of whatever may or may not be credited to the trust funds. In particular, the size of the balances in the Social Security trust funds--be it $2 trillion, $10 trillion, or zero--does not affect the obligations that the federal government has to the program's beneficiaries. Nor does it affect the government's ability to pay those benefits."
"In their most recent report, the Social Security trustees estimate that the trust funds will not be exhausted until 2032. However, the report also includes the fact that starting in 2013, Social Security taxes will not be sufficient to meet obligations. If the Social Security trust funds were trust funds in the traditional sense, their assets could be sold to cover the shortfall. However, as stated above, the surpluses in the trust funds have been loaned to the federal government, and although special bonds have been issued to indemnify the funds, the bonds are nothing more than the federal government's IOUs to itself. Starting in 2013, the program's expenditures will exceed payroll taxes, and the government will eventually have to go further in debt, raise taxes, cut spending, or infuse more general revenues to be able to send out Social Security checks. We must look beyond the balances in the trust funds to be able to properly evaluate any proposal."
CBO Director Dan L. Crippen and Deputy Director Barry B. Anderson, testimony before the House Ways and Means, February 23, 1999
"Too many of us--from the president to members of Congress to my high school classmates--believe the current balances in the Social Security trust funds will help ease the burden on the children of the baby boomers. That is, unfortunately, not true… Merely changing the bookkeeping for the Social Security trust funds may only make us feel better at the expense of our kids."
CBO Director Dan L. Crippen (Washington Post, May 18 2000)
The General Accounting Office (GAO)
Social Security's "trust funds are not like private trust funds. They are simply budget accounts used to record receipts and expenditures earmarked for specific purposes. A private trust fund can set aside money for the future by increasing its assets. However, under current law, when the trust funds' receipts exceed costs, they are invested in Treasury securities and used to meet current cash needs of the government. These securities are an asset to the trust fund, but they are a claim on the Treasury. Any increase in assets to the trust funds is an equal increase in claims on the Treasury."
David M. Walker, Comptroller General of the United States, "Social Security And Surpluses: GAO's Perspective on the President's Proposals," February 23, 1999
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