Democrats are all about saying how there is money in the trust fund to
last far longer than President Bush's projections. David Frum refutes
this in a way that even I can be reliably trusted to repeat. He
writes
If you or I held hundreds of billions of dollars of Treasury bills, we'd think ourselves pretty comfortably provided for. So if T-bills are good enough for Bill Gates and the Bank of Japan, why aren't they good enough to secure the future of America's retirees?
NRO readers, being a sophisticated bunch, have probably already spotted the fallacy here. If Fred writes an IOU for $10 to Jim, Jim has an asset. But if Fred writes an IOU to Fred for $10, he has not created an asset for himself — he's created a reminder notice.
And that's the situation of the Trust Fund.
One branch of the US government (the Treasury) owes another branch (the Trust Fund) a bunch of money. The question is not whether those IOUs are legally binding. Of course they are. The question is: Does the existence of those IOUs in any way make it easier for the US government to pay Social Security benefits? And the answer to that is of course not.
That's why the crucial fact about Social Security is not the legal question of how many bonds it has. The crucial fact about Social Security is the economic question: When will the demands on the system exceed the system's revenues? Currently, the crossover point is estimated to be thirteen years from now.