When anyone tells Social Security doomsayers that the baby boomers are provided for by the Social Security Trust Fund, they tend to say that the trust fund is not real, that it is an accounting gimmick, that it doesn’t matter because the United States government still has to come up all that money it needs to pay the trust fund back, which is gong to be, like, impossible. Therefore, disaster looms.
The doomsayers have it wrong. These claims don’t hold up to scrutiny.
The trust fund is real, because it exists by law and the trustees of the Social Security system by law have the authority to redeem the Treasury obligations in the trust fund whenever they need to.
But when the Treasury needs to pay off those obligations so that baby room retirees can get their benefits, won’t that put an insupportable burden on the taxpayers? No. There will be a considerable burden, but it won’t be of any larger scale than several other major spending needs and debt repayments.
The total debt of the US Treasury at the present is 15 trillion dollars, and 2.5 trillion of that is owed to Social Security. So Social Security is a big chunk of debt but still only one sixth of the total.
To recap, then, is there money set aside to pay benefits to retiring baby boomers? Yes. Is it reasonable to believe that the government can deliver that money when it is needed? Yes.
For a later post, I’ll cover the issue of whether Social Security revenues, backed up by the trust fund, are really going to be enough to pay retirees for the foreseeable future. But the trust fund is there and will be needed, along with continued payroll tax contributions from working Americans.