Is the Social Security trust fund an "accounting fiction" as the Bush administration claims?

Answer 1

Not so much a fiction as an accounting device -- for the contributions are not segregated into a separate account. SS Contributions are simply paid into the treasury & paid out when needed like any other government funds. However, when a contribution is received an accounting entry is made into the notional "trust fund" account and into the particular contributor's sub-account. When the funds are paid out another entry is made to show that the government "owes" the SS Trust fund the sum paid out.

The accounting reason for this separate accounting treatment is so that the government can raise or lower the SS contributions separately from other taxes, depending upon the anticipated SS liabilities & income from the separate SS tax. The political reason for the separate accounting was to sell the scheme to the people in 1932 by making it seem as though each person would have his own savings account instead of a simple pension entitlement paid for by a tax on his earnings.

Answer 2

Just about everything that comes out of this administration is fiction. I dont believe a word they say!

Answer 3

Bush creates fiction!! It is not accounting fiction, what it is is mostly IOUs from the US government- GW the biggest offender!