Are the monies collected for Social Security, and the interest received from those monies, used only for the Social Security program? Or are any of them used for other things?

Social Security contributions, and interest on the invested assets which are not needed to pay current benefits, are invested in government securities. The securities are required by law to have maturity dates with due regard for the needs of the trust funds. The government uses the invested funds to finance other government spending. The government owes the money which the trust funds have loaned to it, and the government will have to repay it as the securities come due.

25.2 Does all the money paid into Social Security remain to be spent only for Social Security (not used to balance budget or spent on other projects)?

See above

25.3 Does all the interest earned from the Social Security trust funds go back into the trust funds or does some of the interest go someplace else?

All interest is credited to the trust funds. Interest earnings in 1997 were $43.8 billion.

25.4 Is the budget for the "Administration" of the Social Security program taken from Social Security taxes?

Yes, Social Security administrative costs are paid for by Social Security contributions. Administrative costs currently represent less than 1% of total program costs.

25.5 Is there interest received from money loaned by the trust fund? If so, is the interest earned put back in the trust funds?

Yes, interest is paid by the government and credited to the trust funds. Interest earnings in 1997 were $43.8 billion.

25.6 Are we spending the reserve as well as paying out interest on the bonds the "fund" is invested in?

Not in the near future. Social Security now uses interest income to help pay benefits. Social Security will, according to the intermediate estimate, begin to spend its assets to help pay benefits in 2021. About 2032, income to the trust funds will represent about 75% of what is needed to pay benefits, and the assets will be gone if no changes are made in the program by then.

25.7 Since the Social Security program was established how much money has been taken out of the trust funds for other government programs? Will that amount be paid back to the system as part of the reform?

As of December, 1997, the trust funds had assets of $656 billion which were invested in government securities, having been borrowed by the government to pay for other government spending. The government will have to pay this money back to the Trust Funds.

25.8 How much money does the government borrow from the Social Security Trust Funds?

In 1997, $90 billion.

25.9 Has the government borrowed money from Social Security in addition to trying to balance the Federal budget? If so, for what, and should there be safeguards against this?

The government only borrows from the Trust Funds to the extent that they have money available for investment. This is not done for the primary purpose of balancing the budget(although it does have this effect).

25.10 It is my understanding that we are currently using Social Security funds for other purposes. Isn't this a misappropriation of funds?

No, the funds are entirely invested in government securities that are recognized as part of the National Debt. The Treasury Department uses the proceeds as authorized by Congress in just the same manner as proceeds from securities sold to the general public. The average interest rate of the total investment was 7.5% in 1997.

25.11 Where is the $30 billion surplus per year for the next ten years going to be treated in the Federal budget?

If the Congress does not reduce taxes or increase expenditures, the effect will be to reduce the National Debt (by redeeming or buying back government securities held by the general public.)