Expenditures alleged to be related to trust funds are often less than their income...witness the highway and airport funds as well Social Security. There is no particular reason they cannot be more. The accountants can just as well declare the bottom line of the funds' accounts negative as positive and the Treasury can go on making whatever outlays are prescribed by law. The Treasury can pay out all that Social Security provides while the accountants declare the funds more and more in the red.
Eisner cites a 27-year veteran of the Office of Management Budget, who, regarding the "misconception" that benefit payments depend on the trust funds, confirmed to him: "You are absolutely correct on this point," adding, "very few if any of the academics or analysts who comment on Social Security have the guts (or perhaps knowledge) to recognize this fundamental fact."
And, more recently, James K. Galbraith:
Social Security and Medicare are government programs; they cannot go bankrupt, and they cannot fail to meet their obligations unless Congress decides to cut the benefits they provide. The exercise of linking future benefits and projected payroll tax revenues is an accounting farce, done for political reasons.
You can also look at economist Mike Norman's page, with screenshots of the Daily Treasury Statement, showing that "employment taxes" do not "go into the 'trust fund' where they are either used to pay for benefits or saved for later," but "deposit into, and withdraw from, the same Treasury General Account as all other government programs."
Norman also finds the trust-fund scheme to be the Achilles-heel:
I make these points because the supposed Trust Funds have now become the weak point for Social Security and Medicare. The Peterson hacks love to scream about how the funds are going broke, and how we need to slash benefits NOW!! The reality is that Social Security and Medicare will always be solvent, just like every other federal program. There is no financial reason why the federal government cannot just credit our bank accounts in any amount that it wants. [my italics]
There are a few things to unpack from these quotes. One is the relatively simple fact that payroll taxes are treated as part of the Treasury General Account, and labelling them part of a "Trust Fund" is just that labeling. It's like a putting a "Super Important" tag on an email, so you can know exactly how many super-important messages are part of the big pile you're ignoring. The "Trust Fund" is part of the big pile of taxes registered in the General Account. It's a labeling/sorting/accounting device, not really a separate "thing."
That is the simplest point in what Trump and Mnuchin said, and it is probably as far as they would ever want to go with it. It's relatively safe because it leaves the General Fund as the place where taxes that pay for programs are found. But there are a couple of other points in what Eisner and Norman say above that lead us beyond that, to exactly where the left should move the debate.
One of those important points is Eisner's: That "Social Security payments are an obligation under law of the U.S. government"The Treasury can pay out all that Social Security provides while the accountants declare the funds more and more in the red."
Here's the relevant section of a Congressional Research Report on "Social Security: What Would Happen If the Trust Funds Ran Out?" from 2014, updated in July of this year:
Legal Entitlement to Social Security Benefits
The Social Security Act states that every individual who meets program eligibility requirements is entitled to benefits. Social Security is an entitlement program, which means that the federal government is legally obligated to pay Social Security benefits to all those who are eligible for them as set forth in the statute. If the federal government fails to pay the benefits stipulated by law, beneficiaries could take legal action. Insolvency would not relieve the government of its obligation to provide benefits. [italics in original]
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