At the end of 1997, the trust funds held assets of $656 billion, which came from the excess of payroll taxes, income taxes on benefits and interest on invested assets over the total outgo. These investments continued to earn interest and they can be redeemed on demand when needed to pay benefits.

9.2 A certain amount of Social Security funds were converted to debt during the Vietnam war, to finance that war. What is the long-term impact of the continuing debt that the Social Security system carries as a result of those debts?

Social Security does not carry any such debt. It has assets of $656 billion at the end of 1997, which is projected to grow to $3.8 trillion in about 20 years. The federal governments' operating budget carries the debt for the money that it has borrowed from Social Security.

9.3 How much has been raided from Social Security, and what has been the effect?

As of the end of 1997, $655.5 billion has been borrowed (not "raided") and invested in government securities, backed by the full faith and credit of the U.S. Government. These investments are required under law to have maturities fixed with due regard to the needs of the Social Security trust funds. When the investments reach their maturity date, the federal government must pay them off. It can do this, as it does with other privately held securities, by reducing costs of the government budget, financing the obligation with new borrowing, or raising taxes.

9.4 What specific financial difficulties have occurred, if any, as to the Social Security trust funds, other than not having enough workers to contribute to the Baby Boomer's retirees?

None in the past. Benefits have always been paid in a timely manner.

9.5 How much money does the Federal government owe the Social Security system?

As of the end of 1997, $656 billion has been invested in government securities, backed by the full faith and credit of the U.S. Government.

9.6 Because the upcoming shortfalls are related to the Baby Boomer generation, how long is it estimated that the financing will it be affected and will then eventually return to normal? In other words, how many years is it expected to run at a shortfall?

If no changes are made in Social Security, the assets are projected under the intermediate estimate, to be exhausted in 2032, at which point the income to the trust funds will represent about 75% of what is needed to pay benefits. If no changes are made by 2070, income to the trust funds would cover only about two-thirds of benefits. This is due to longer life spans, more beneficiaries, and relatively fewer workers (as compared with the number of beneficiaries).

9.7 Isn't anyone concerned about how Generation X will be able to support Baby Boomers in retirement with respect to production and services?

This is an important aspect of the current debate about Social Security.

9.8 Is this a population problem? After baby boomers retire, will the system stabilize?

It is a demographic reality: more beneficiaries due to the baby boom and relatively fewer workers due to the fact that later generations have had fewer children. It is also due to longer life spans, due in part, at least, to better living standards in retirement as a result of Social Security and better health care as a result of Medicare.

9.9 What is going to happen when the program runs out of money? Will there be a point when there is no money left to pay benefits? In the year 2050, I will be at an age to retire, in what condition will Social Security be when I reach that point?

If no action were taken, the actuaries project under the intermediate estimate, that the Social Security trust funds will have about 75% of what is needed to pay benefits in the year 2032, the first year of shortfall. If no action were taken after this point, by 2070, the trust funds would have about 67 percent of what is needed to pay benefits. However, if this were to eventuate, it is certain that Congress would make the appropriate changes to put the system back into balance.

9.10 Are the Social Security projections in the future related to all benefit calculations (i.e. disability, retirement, and survivor), or are they simply focused on the retirement payouts?

Yes, they include all Social Security benefits--retirement, disability, and survivors insurance.

9.11 What does it mean "the only way to redeem the bonds is to raise taxes?" Is there no money to repay the T-bills?

(The "surplus" is NOT invested in T-bills)

The Social Security assets, ($655.5 billion at the end of 1997) are currently invested in government securities backed by the full faith and credit of the U.S. Government. These investments are required under law to have maturities fixed with due regard to the needs of the Social Security trust funds. When the investments reach their maturity date, the federal government must pay them off. It can do this, as it does with other privately held securities, by reducing costs in the government budget, financing the obligation with new borrowing, or raising taxes. The government borrowed the Social Security funds for other governmental spending, just as it does with private borrowing. The fact that the government owes Social Security these funds is due to government spending, not to Social Security indebtedness.

9.12 With the increase in lower paying jobs and part-time jobs, where will the adequate funding for the benefits come from?

Growth in the national economy, as well as productivity increases, can contribute importantly to financing Social Security benefits. In addition, changes may have to be made to reduce long-range costs. There are many possibilities and proposals being put -forward now which give the country the opportunity to consider the costs and benefits of all the options.

9.13 As to the crisis in 2029, how long will that last? 25 years or so? Can't the assets in the trust funds if used wisely cover that period of time?

The intermediate cost estimate of the 1998 Social Security trustees report projects 2032 (rather than 2029) as the first year when Social Security will not be able to make full benefit payments if no action is taken to change the program, because then all assets of the trust funds will have been paid out (at this point Social Security could pay about 75% of benefits). If nothing were done by 2070, Social Security would have about 67% of what would be needed to pay benefits. The $3.78 trillion that will have accumulated as assets by 2020 will be used over the following 12 years to help pay the benefits.

9.14 With the increase in lower paying jobs and part-time jobs, where will the adequate funding for the benefits come from?

Growth in the national economy, as well as productivity increases, can contribute importantly to financing Social Security benefits. In addition, changes may have to be made to reduce long-range costs. There are many possibilities and proposals being put forward now which give the country the opportunity to consider the costs and benefits of all the options.

9.15 How much is actually left in Social Security?

The Trust Fund has about $655 billion invested in U.S. Treasury obligations today.

9.16 Is there discussion relating Social Security to national spending priorities? Should we try to solve the waste in government spending and use the savings to shore up Social Security?

Under current budget rules, Social Security is generally considered separately from other programs. People disagree about what constitutes "waste." Activities that are of low priority for some people are top priorities for others. Most experts on the federal budget do not believe that management improvements in government programs will produce savings that would make a big difference in Social Security.