"See the comment of yours I bolded above. That's not really true. If it were true, then the SS Trust fund would not be running a deficit."
It is true, because it's not, because it is earning big interest on loans to the UST. You think I wanted them to put my money in a coffee can for 40 years? That first dollar, the one that would have bought me 3 gallons of gas back in the day, would now get me about a quart. I want my money to grow to keep pace, in the safest bank in the world.
How do the Social Security Trust Funds earn interest?
By law, the assets of the Social Security programs must be invested in interest-bearing government securities or securities guaranteed by the government. The Trust Funds hold a mix of short-term and long-term government securities. The Trust Funds can hold both regular Treasury securities and special obligation securities issued only to federal trust funds. Currently, all securities in the Social Security Trust Funds are special obligations.
The rate of interest on special issues is determined by a formula enacted in 1960. The rate is determined at the end of each month and applies to new investments in the following month.
The average of the 12 monthly interest rates for 2010 was 2.760 percent. The effective interest rate (the average rate of return on all investments) for the OASI and DI Trust Funds, combined, was 4.6 percent in 2010. This higher effective rate resulted because the funds hold special-issue bonds acquired in past years when interest rates were higher.
ssa-custhelp.ssa.gov 
The 2011 Trustees Report Press Release stated:
"Income including interest to the combined OASDI Trust Funds amounted to $805 billion in 2011. ($564 billion in net contributions, $24 billion from taxation of benefits, $114 billion in interest, and $103 billion in reimbursements from the General Fund of the Treasury—almost exclusively resulting from the 2011 payroll tax legislation.)
en.wikipedia.org |
