Treasury Acknowledges Social Security "Trust Fund" is Meaningless
Investment bankers are excruciatingly familiar with the concept of “Notes to Consolidated Financial Statements.” It’s where all the work — and reward — is to be found in stock analysis.
But I must admit I had no idea that the Federal Goverment issues its own “Notes to Consolidated Financial Statements.” I’m a stock guy — I don’t do Treasury securities.
And look what’s in those Notes:
In the Federal budget, the term “trust fund” means only that the law requires a particular fund be accounted for separately, used only for a specified purpose, and designated as a trust fund. A change in law may change the future receipts and the terms under which the fund’s resources are spent. In the private sector, trust fund refers to funds of one party held and managed by a second party (the trustee) in a fiduciary capacity.
Trust fund net assets represent the unexpended balance from all sources of receipts and amounts due the trust funds, regardless of source, including related Governmental transactions. These are transactions between two different entities within the Government (for example, monies received by one entity of the Government from another entity of the Government).
Intragovernmental net assets are comprised of investments in Federal debt securities, related accrued interest, and fund balances with Treasury. These amounts were eliminated in preparing these financial statements.
In other words, the only reason the Treasury Department calls the Social Security “trust fund” a “trust fund” is because Congress ordered them to.
Now, the idea of “intracompany eliminations” is S.O.P. in my greedy industry. In other words, if one subsidiary of KipCorp owes money to another subsidiary of KipCorp, then, from the point of view of KipCorp’s investors, such accounting complexities must be netted out, because they have no real economic meaning.
Wall Street gets it. The Treasury Department gets it. President Bush gets it.
The AARP doesn’t get it. Rock the Vote doesn’t get it. Most Democrats don’t get it.
Do you get it?
Hat tip to Social Security Choice.
Similar Posts:
- Social Security: NYT Repeats “Full Faith & Credit” Lie
- Another NYT Social Security Lie: More Trust Fund Deception
- Social Security: Doomsday is On Schedule
- Social Security Trustees: Doomsday Still On Schedule
- President Spills Coffee on Social Security “Trust Fund”
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No, you're wrong. They all get it too. They simply don't care. The continuation of their program of intergenerational robbery is more important than honesty.
They are, after all, politicians.
Here's a conundrum though: an "I-O-Me" might be meaningless, but isn't it fungible? Seems as though the Treasury ought to be able to pull those bonds out of the filing cabinet and sell them on the open market like any other government bond, exchanging the nominal promise of future payment for present cash. If the Treasury believes those bonds are meaningless, I'd be happy to send them a self-addressed stamped envelope and take the "worthless paper" off their hands. If they sent them to you, would you throw them away with the rest of the junk mail?