The Social Security trust fund a mirage?????

The Republicans and the Bush administration have told us repeatedly that the Social Security trust fund is just a myth it doesn't really exist. This has caused many of us to wonder what happened to all those treasury bonds by FICIA taxes have been buying since 1983? Today David Sarasohn asks the same question.

If you held a piece of the Social Security trust fund -- which you do only if you've ever worked -- you might get the impression that this is the time to sell.

"The trust fund is a mirage," says Sen. Charles Grassley, R-Iowa, chairman of the key Senate Finance Committee.

President Bush tells a North Carolina crowd, "There are empty promises, but there's no pile of money that you thought was there when you retired."


The New York Times explains loftily that the whole idea that the trust fund is real was "a misunderstanding."

So $1.7 trillion of surplus Social Security tax payments over the last 20 years -- plus another trillion of surplus payments the Bush administration plans to help itself to over the next five years, including $160 billion in the coming year -- have turned into a mirage, empty promises and a misunderstanding.

So what happened to all that money?

Apparently, the tax overpayment -- the product of a major package of Social Security tax increases and benefit cuts passed in 1983 to build a fund to pay for baby boomer retirement -- was actually just a slush fund for politicians' convenience. Without it, next year's deficit might be $600 billion, a figure that could even startle Dick Cheney.

If the trust fund is taken seriously, as a resource to be drawn down as needed, Social Security is solvent at least until 2042, and probably considerably later. But, as the Bush administration explains that Social Security will start to run short in 2018, it seems the trust fund is nothing that matters, let alone anything to be paid back to workers who paid excess taxes in order to bolster their retirement situation.

But guess what? Those treasury bonds do indeed exist and that's our money.

But the Los Angeles Times went in search of the trust fund and found $1.7 trillion in special-issue Treasury bonds in a Bureau of the Public Debt safe in Parkersburg, W.Va. On the bonds, a congressional instruction declared, "the United States is pledged to . . . the obligation with respect to both principal and interest."

So if those bonds are just worthless pieces of paper what about the bonds purchased by the Chinese, Japanese, Koreans etc. Is it any wonder the Koreans are dumping their bonds?