When your FICA tax is taken out of your paycheck, it does not get squirreled away in some lockbox in West Virginia where it's kept until you and your contemporaries retire. Most goes out immediately to pay current retirees, and the rest (say, $100) goes to the U.S. Treasury is spent. On roads, bridges, national defense, public television, whatever .
In return for that $100, the Treasury sends the Social Security Administration a piece of paper that says: IOU $100. There are countless such pieces of paper in the lockbox. They are called "special issue" bonds.
They are worthless....
So when democrats say that there are trillions in this lockbox that keep the system solvent until 2037, they are perpetrating a fiction What happens when you retire? Your Social Security will come out of the taxes and borrowing of that fiscal year.
Why is this a problem? Because as of 2010, the pay-as-you-go Social Security system is in the red. For decades it had been in the black, taking in more in FICA taxes than it sent out in Social Security benefits. The surplus, scooped up by the Treasury, reduced the federal debt by tens of billions. But demography is destiny. The ratio of workers to retirees is shrinking year by year. Instead of Social Security producing annual surpluses that reduce the federal deficit, it is now producing shortfalls that increase the federal deficit -- $37 billion in 2010. It will only get worse as the baby boomers retire.
That's what makes the lefts' claim that Social Security is solvent so cynical. The Republicans have said that their April budget will contain real entitlement reform. President Obama is preparing the ground to demagogue Social Security right through the 2012 elections.
Those heartless Republicans don't just want to throw granny in the snow, they want to throw granny in the snow to solve a problem that doesn't even exist! Vote Obama.