>Please, it earns nothing! The trust fund represents a debt, not >an asset. It makes no sense to talk about the government paying >interest to itself!
Wrong. The SSTF does indeed earn interest. The bonds in the TF represent an asset to the TF, but a liability to the nation's general fund. Because it was indeed the nation's general fund which spent money it didn't have! The general fund would have the same total debt if the SSTF did not exist. The money would been borrowed from, and therefore owed, and the interest paid, to private bondholders instead.
>When those bonds in the trust fund come due, they can only be paid from new taxes or reduced spending elsewhere in the government.
Wrong. The gov't can 'rollover' the bonds to public debt instead, thereby raising the money WITHOUT increasing the National Debt by 1 cent. Indeed, the SSTF obligation is included in the National Debt figure. And the projections for that time of 'rollover' currently are for no annual budget deficit and a much lower National Debt in terms of percent of GNP! A much better environment for 'public borrowing' than there was at the time that the excess SS funds were borrowed.
The SSTF mechanism was indeed an excellent idea by Alan Greenspan. It did what it was supposed to do: store excess SS tax receipts for future needs. It certainly does NOT solve the SS program's long term problems. But it is not the 'scam' many people claim!
