The Heritage Foundation has a nice piece describing how Social Security works, and my favorite part is their description of the "trust funds".

The Social Security trust fund consists only of spe­cial-issue Treasury bonds. These bonds are special in that they can only be issued to and redeemed by the Social Security trust funds. They cannot be sold in the open market. ...

Because these are special-issue bonds that are payable only to the Social Security Administration, the SSA cannot sell them to a third party to raise money to pay benefits. This reinforces the fact that these bonds are really nothing more than IOUs from one branch of government to another. They are not a real financial asset.

Until relatively recently, these bonds existed only as entries in a record book. Now, however, when a new bond is issued, it is printed on a laser printer located at the Bureau of the Public Debt office in Parkersburg, West Virginia. The bond is then carried across the room and put in a fireproof filing cabinet. That filing cabinet is the Social Security trust funds. ...

According to the OMB, there are only four ways that Congress can repay these bonds: raise other taxes, authorize the Treasury to borrow the needed funds from the public, reduce spending on other federal programs and use the savings to redeem Social Security’s bonds, or simply reduce Social Security benefits. None of these options is easy or attractive.

Social Security is doomed, and the longer we take to recognize it the worse the fallout will be.

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