To a different agency.
Just like my example of "to a different pocket". We have one government. Shuffling money between the agencies doesn't create and overall debt or asset for the government. Congress has legal powers over all the agencies. If it passed a law setting the trust fund at zero it would not be a default. It would not be a repudiation of a debt, there is no real debt to repudiate from the perspective of the government as a whole.
It would be a default (or an attempt at default if a court stopped it) if congress passed such a law for normal treasury bonds, owned by people or organizations outside of the US government.
If I own a treasury bond, I have a real asset (assuming the US isn't going to default soon, and I doubt that will happen). If I own an IOU to myself I have no asset, neither does the government.
The "trust fund" is an account entry that only has meaning because of a law about cutting Social Security payments when it "runs out". Other than that it has no meaning. It has no usefulness. It doesn't back benefits to American citizens because it doesn't have the ability to back anything. The money isn't there and never was.
The "trust fund" is nominally being drawn down. That makes people think that money is being withdrawn to pay their benefits, but there is no money to withdraw. The benefits are being paid from the income tax, just as if there was no "fund", but no law barring ordinary taxes from being used to pay for Social Security benefits except through nominally "paying back the fund".
Some people claim "SS had a surplus, it didn't cost anything, it produced more than it spent". That's like renaming the income tax in to "the defense tax", and claiming that defense produces a surplus.
The reality is there is taxes, and there is spending. There is also debt, but no savings from the government. The government doesn't have any funds except accounts used to manager the operations of the government, or to hold incoming income taxes, that are dwarfed by the debt, and are also smaller then the yearly spending. There is nothing to draw on other than tax income.
Social Security spending (other than in terms of the size and the politics of it) is spending like any other spending. Social Security taxes are taxes like any other taxes. Creating them through the same law and giving them the same name doesn't change that. Shuffling the money around withing the government doesn't change the fact that the government spends everything it bring in each year (and more). |
