When the Social Security Act of 1935 was first created by the
government, it was a well intended program. When you have politicians
involved, even the best intentions often have disastrous consequences.
From the beginning social security took monthly contributions-taxes- and
paid the recipients. By law any excess revenues must be placed in
special-issue, non-marketable Treasury bonds. Essentially, that is the
federal government loaning itself money. The Treasury bonds goes into
Social Security and the actual money is spent in the general budget.
It is true that by being in the form of bonds, these assets-I
use that word loosely- do gain interest, most often less than 2%. What
even the most educated fail to tell you is that this is not truly an
asset, but a debt. By turning those excess dollars into treasury bonds,
the government could take Social Security funds and spend them any place
they wish.
