April 20, 2011
The Honorable Mike Enzi
379a Russell Senate Office Building
Washington, DC 20510
Dear Senator Enzi,
You were quoted on the NPR news show Power Breakfast saying “Anybody who is saying that Social Security is in good shape is making a political statement that they don’t want to handle it during their term in office… It’s one of those amazing trust funds that the United States has that has no money in it, it has IOU’s in it and that should worry everybody” in reference to the bonds that make up the Social Security Trust Fund.
Thankfully, there is little cause for worry. The government sold U.S. government bonds to the Trust Fund, just as it sells bonds to individuals and private corporations every day of the week. Just as with any funds used to purchase bonds, the money is borrowed by the government, but repaid at the end of the term of the bond. As long as the law is followed and the bonds are repaid on schedule, there is no reason to worry about the Social Security Trust Fund. In fact the Social Security trustees report clearly shows that Social Security will remain fully solvent through 2037 and will be able to pay roughly 80 percent of scheduled benefits from then on even if no changes are ever made.
While it would be unacceptable to have benefits drop by more than 20 percent, Congress has more than a quarter century to prepare for this situation. The projected shortfall is substantial, but nonetheless considerably smaller than other budgetary changes we have seen in recent years. For example, it is more than 20 percent less, measured as a share of GDP, than the increase in annual defense spending than we have seen from 2000 to 2010.
I hope that you will be careful to present the situation more accurately in future public statements. If you would like any additional background on the program, I would be happy to assist you.
