Social Security - The interest issue

05-23-2011 • ZeroHedge.com

The question that has to come to mind is, “If the Trustees missed the first critical milestone on this slippery slope, how much faith should we put into their “Drop Dead Date” where SS runs out of money?” IMHO one should put little faith in that 2036 estimate. It could be a decade earlier. A big “Pro SS” argument you hear is that there is a big surplus in the Trust Fund. That this Fund is as big as it is because workers have been paying into it for years. “They deserve the money back”, is the thinking. At the end of 2010 the Fund was, in fact, very big. It stood at 2.6 Trillion. But who actually did contribute all that dough? Not what you think. The SSTF has enjoyed cash receipts greater than expenses for years. These annual surpluses were invested in Treasury Bonds. The Trust Fund is equal to the sum of prior year surpluses + interest (and interest on interest). If you apportion the prior years surpluses between contributions by employers and employees you get this pie (in the face) chart :