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April 9, 2005

Here it is in black and white

Here's an interesting item from the Goobage blog -- posted by the pseudonymous blogger "Auntie Goob." It's a link to the Notes to the Financial Statement of the United States government, prepared by the US Treasury for fiscal year 2004. Here's where you plainly see that the assets of the Social Security Trust Fund are perfectly offset by corresponding liabilities of the government -- which are themselves offset by liabilities of the US people. Which all leaves virtually zero net value in the Trust Fund.

Page down to Note 20, Dedicated Collections. There, you will see [Social Security] in all its glory, as the Federal Old-Age and Survivors Insurance Trust Fund. Collections amounted to $551.5 billion in 2004. Expenses were $412.8 billion. Aha, the trust fund increased by $138.7 billion. Almost. Total trust fund assets went up to $1,474.3 billion...

Whoa, now, Nellie. What's this next bunch? "Less Intra-governmental Net Assets", to the tune of $1,472.5 billion, leaving a Consolidated Assets figure of $1.8 billion...

Let us proceed yet unto the further explanations (wend your way down to the next page).

Intragovernmental net assets are comprised of investments in Federal debt securities, related accrued interest, and fund balances with Treasury. These amounts were eliminated in preparing these financial statements.

Consolidated assets represent only the net assets from activity with individuals and organizations outside the Government. All related Governmental balances are removed to present the Government’s position as a whole. [my emphasis]

How here's the killer paragraph:

Most of the trust fund assets are invested in intragovernmental debt holdings. These securities require redemption if a fund’s disbursements exceed its receipts. Redeeming these securities will increase the Government’s financing needs and require more borrowing from the public (or less repayment of debt), or will result in higher taxes than otherwise would have been needed, or less spending on other programs than otherwise would have occurred, or some combination thereof.

There's really no $1.4 trillion in [the Trust Fund], only about $1.8 billion and a bunch of debt. And, as the financial goobronauts clearly explain, if they ever have to pay more than can be supported with current revenues, they have to goob the taxpayers for more of their own money.

So what about "there is no 'trust fund'" -- as President Bush put it -- don't you understand?

Posted by Don Luskin at April 9, 2005 12:05 PM | Print

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