TreasureKY
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quote:
ORIGINAL: njlauren
... SS was supposed to be a trust fund, that would establish some sort of payout when we retired, it was a trust fund for many years, separate from the federal budget. That really changed in the 1980's, when they passed an increase in the SS rates to create a cushion for when the boomers started retiring, and it started running serious surpluses. What happened was that the government started "borrowing' from SS, leaving T notes in its place, to fund the government and to basically hide the ballooning deficits, thanks to the supply side tax cuts Reagan and Bush 1 put in..to do this, SS funds were counted as part of the federal budget and incoming money from SS taxes was included as tax revenue, and payouts were considered 'government spending' , which had not been the way. As a result, when you heard the Reagan and Bush 1 budget deficits were X (and both of them increased the budget deficits tremendously; Carter's last year it was 50 billion, Bush and Reagan both had several hundred billion dollar deficits, and that was masked, it was probably higher; when Reagan took office the national debt was 1 trillion, by the time Bush 1 left it was running about 4 trillion)...so basically, SS is de fact direct tax revenue (think about this, folks, those bonds either have to be called in, which will take tax revenue, or when they come due be replaced by new debt..which pays interest..that interests comes from general tax revenues, which kind of then 'slides around' back into the budget).
Incorrect.
Social Security History
Myth 4: President Roosevelt promised that the money the participants paid would be put into the independent "Trust Fund," rather than into the General operating fund, and therefore, would only be used to fund the Social Security Retirement program, and no other Government program
The idea here is basically correct. However, this statement is usually joined to a second statement to the effect that this principle was violated by subsequent Administrations. However, there has never been any change in the way the Social Security program is financed or the way that Social Security payroll taxes are used by the federal government.
The Social Security Trust Fund was created in 1939 as part of the Amendments enacted in that year. From its inception, the Trust Fund has always worked the same way. The Social Security Trust Fund has never been "put into the general fund of the government."
Most likely this myth comes from a confusion between the financing of the Social Security program and the way the Social Security Trust Fund is treated in federal budget accounting. Starting in 1969 (due to action by the Johnson Administration in 1968) the transactions to the Trust Fund were included in what is known as the "unified budget." This means that every function of the federal government is included in a single budget. This is sometimes described by saying that the Social Security Trust Funds are "on-budget." This budget treatment of the Social Security Trust Fund continued until 1990 when the Trust Funds were again taken "off-budget." This means only that they are shown as a separate account in the federal budget. But whether the Trust Funds are "on-budget" or "off-budget" is primarily a question of accounting practices--it has no affect on the actual operations of the Trust Fund itself.
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