The Honorable Rick Perry
Office of the Governor
State Insurance Building
1100 San Jacinto
Austin, TX 78711

Dear Governor Perry,

The transcript of a speech touting your “cut, grow, and balance plan” features several statements that misrepresent the Social Security program. The most egregious example is your statement that “… the [Social Security] trust fund is full of IOUs, without a single dime of money left over from what workers have paid in. The politicians have borrowed against it for years. And in order to redeem the IOUs in the fund, they will have to either raise taxes or cut spending on other programs to replenish it.”

This is not an accurate statement. The recommendations of the Greenspan Commission in 1983, led to the growth of a large surplus in the Social Security trust fund that has since been used to buy U.S. bonds, widely considered to be among the world’s safest investments. The government sold these bonds to the Social Security trust fund, just as it sells bonds to individuals and private corporations every day of the week. Just as with any funds that come from the purchase of bonds, the money is borrowed by the government, but repaid at the end of the term of the bond. Saying that these bonds are IOUs is like saying the $100 savings bond for a newborn grand-daughter is just an IOU or the bonds currently trading at record-low rates are just IOUs. Saying that they are IOUs is a distortion of the facts.

While it is commendable that you recognize the role that Social Security plays in the lives of our seniors and in the retirement security of all Americans, I hope you and your staff will have the opportunity to further review the design and finances of the program as you prepare future public statements on the topic. If you would like any additional background on the program, I would be happy to assist you.