Here’s a letter to a WTOP (Washington, DC) radio celebrity:
Mr. David Burd
Dear Mr. Burd:
During your report this morning on Social Security, you admonished Congress to keep its “sticky fingers off the Social Security trust fund.” Your admonition is flawed on two levels.
First, there is no actual Social Security trust fund . Because Social Security is (as its in-house historian admits ) a pay-as-you-go system, money contributed today is – as it has always been – spent today. The so-called “trust fund” is filled only with I.O.U.’s written by one agency of government (the U.S. Treasury) to another agency (the Social Security Administration). The “trust fund’s” value is no more real than would have been the value of a fund established, say, by Bernie Madoff and filled with I.O.U.s on which Mr. Madoff promised to pay to himself the full value of the I.O.U.s when the time came for him to assemble all the funds necessary for him to compensate the unlucky dupes of his deceit.
Second, while Congress’s fingers are indeed sticky, the objectionable use of those fingers lies less in how Congress spends Social Security tax revenues than in its forcing workers to pay Social Security taxes to begin with – that is, forcing workers to ‘contribute’ dollar amounts to a government-run pension scheme that workers would not ‘contribute’ if Congress kept its sticky fingers to itself. If a thief steals your money and promises to use it to buy you a coat, your anger remains properly focused on the theft of your money and not on the thief’s change of plans to use your money instead to buy a negligee for his girlfriend.
Donald J. Boudreaux
Professor of Economics
George Mason University
Fairfax, VA 22030