Why Conservatives Don’t Understand (or Care About) the Social Security Trust Fund
The conservative meme that the Social Security trust fund is a “fiction” is based on the banal fact that Social Security contributions are paid into the treasury, and paid out when needed. Note, though, that each such contribution results in an accounting entry in the notional “trust fund” account and in the contributor’s sub-account.
An “accounting entry?”
Sounds like fiction, doesn’t it?
Well, it is, sort of, in exactly the same way that a bank’s ability to loan more money than it has in deposit reserves is a sort of “fiction,” merely an accounting device, a kind of convenient social contract only.
Other “fictions” in our system — as we have seen so vividly recently — include our national debt obligations. Apparently, if we so decide, and as some Tea Party Know-Nothings encourage, we could simply abrogate many of those debt obligations. After all, they’re just accounting entries, right?
One way to identify a radical conservative in these times is by his immoral willingness to dismiss these important social contracts as “mere fictions.”
Here’s Dean Baker’s explanation for the conservative attack on the trust fund:
” … high income people don’t want to pay the taxes to repay the bonds. That is why they are so anxious to convince the public that the trust fund is not real. I calculated that defaulting on the trust fund would transfer more than $1 trillion from the bottom 95 percent of the income distribution to the richest 5 percent (“Defaulting on the Social Security Trust Fund Bonds: Winners and Losers”). The richest 1 percent of families would walk away with nearly $750,000 each.
“In short, there is a lot of money at stake in convincing the public that the Social Security trust fund is not real. That is the reason we hear it called a fiction. In reality, there is nothing more confusing about the trust fund than an ordinary bank account. The public absolutely should demand that the government not default on the bonds held by Social Security and that the politicians and pundits start talking more honestly about the program.”