Social Security and the debt limit

Ida May Fuller, the first SSI recipient (Public Domain)

President Obama’s warning that a failure to increase the debt limit may mean that there is not enough money in the federal treasury to send out Social Security checks should put a stake through the heart of the myth that there is a Social Security trust fund.  In an interview with CBS News, President Obama said, “I cannot guarantee that those checks go out on August 3rd if we haven’t resolved this issue. Because there may simply not be the money in the coffers to do it.”

 

For decades now, Social Security has been sold to the American public as a retirement plan.  Many Americans believe that their Social Security taxes go into an account that is held for them until they retire.  In reality, Social Security is a pay-as-you-go program in which current tax receipts are used to pay the benefits for current retirees.

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