It’s estimated that the Social Security fund will be depleted by 2034 and that the Medicare fund will become insolvent by 2026. Payments for expenses such as nursing homes or hospital stays could stop. It’s likely that benefits will be partially reduced to balance the Social Security and Medicare fund rather than completely cutting these programs.
This is nonsense economics that misrepresents the purpose of Treasury bonds. They are a good investment, for anyone who isn’t the federal government. This misrepresentation is only possible because people believe that America actually “borrows” money via Treasury bonds, which is actually impossible for the monopoly issuer of the currency as a method of increasing the money supply. The currency must be created by federal spending before it is available to either purchase bonds or pay taxes.
Neither bonds nor taxes directly fund any spending at the federal level. The monetary system was designed around defending the gold reserve when we did that gold nonsense, so it was beneficial that the government never “have” money. Being the issuer of the money it also never didn’t have as much money as it wished to spend. This was accomplished in compliance with dual entry spreadsheet accounting by creating an opposing entry in the government sector for every dollar created in the private sector.
This balancing entry advised Congress of the currency in circulation/savings and is labeled “debt”. Any dollars of revenue the government collects are destroyed/balanced by the debt that created it as a first order accounting function and cannot then be spent by Congress. This created a clean accounting system for error checking and fit with the timing of creation and destruction of money. All spending by Congress is via newly created money.
Bonds are recapitalized upon their maturity at their face value with newly created currency as part of the non-discretionary budget under “debt service”. While there are various theories for the payroll tax being insufficient to supply current benefit levels ongoing, none of those change the “fact” that those benefits are entirely funded by current appropriations, not the bonds or the tax, which are only accounting entities containing no actual currency.
The bonds gave the SS program a legal claim to the gold reserve to avoid political tampering with the program, but are now being used to cover the “fact” Congress can pay benefits at any level it wishes via policy choices, not economics. Here is a clip with Alan Greenspan, under oath, schooling Paul Ryan on how this works and how it applies to Social Security’s solvency. Greenspan often contradicts himself between what he says under oath and general statements made to the press. It is safe to accept his statements under oath as factual in such cases.
