The Paul Krugman Award for Forgetting Everything You Knew About Economics In Order to Shill for Your Favorite Political Party Goes To.....

Obama budget director Jacob Lew, who wrote this lucid statement about the Social Security "Trust Fund" back in 2000

"These [trust fund] balances are available to finance future benefit payments and other trust fund expenditures—but only in a bookkeeping sense. These funds are not set up to be pension funds, like the funds of private pension plans. They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures. The existence of large trust fund balances, therefore, does not, by itself, have any impact on the Government's ability to pay benefits." [bold added]

Needless to say, he has changed his tune now that he is being paid to shout "all is well" as enabler-in-chief of Obama's spending habit.


  1. Don Lloyd:

    Even if actual money were stored away in the SS Trust Fund when payroll tax receipts exceed current payouts this would be a silly thing to do.

    It would be equivalent to burning any surplus payroll tax receipts in the present and printing new money to make up for shortfalls in the future.

    The only way to 'prefund' future payout shortfalls is to maximize the ability of the economy to produce wanted goods and services over time. Everything else represents a transfer of purchasing power in the future to SS recipients from everyone else.

    Regards, Don

  2. BCM:

    Great title.

  3. Graeme:

    If the Fed inflates the US $, then these liabilities can be paid - but the purchasing power of the recipients will be very disappointing - to say the least.