Social Security and Medicare trust funds are in dire financial condition due to rising benefit costs, but the biggest problem facing the two largest federal entitlement programs is how they’re funded, according to a nonprofit that advocates greater government transparency and accountability.
“Our bottom line is the trust funds are all a shell game, there is no money in the trust funds. As [former U.S. Comptroller-General] David Walker says, the trust funds ‘are accounting devices and not separate and distinct legal entities subject to fiduciary responsibility provisions. I call them Trust the Government Funds since they are funded with more government debt,’" Truth in Accounting (TIA) President Sheila Weinberg told The Epoch Times on Sept. 2.
Weinberg was referring to the fact that the trust funds receive what are in effect IOUs from the Treasury Department that are called “securities”—promises to pay a specified amount at a future date.On Social Security, for example, the government pays interest on the securities, generally about 2 percent, and the total value of the securities is presently just less than $3 trillion. Securities are paid out of general revenues when they come due.
