General Discussion
In reply to the discussion: Stop it, stop saying Social Security needs reform, you are a Democrat, right? [View all]HiPointDem
(20,729 posts)government (iow, borrowed into the general fund) in exchange for government securities ("IOUs). That's in the initial law.
The TF serves a purpose. Ideally it serves as a cushion for overdraft, like keeping extra money in your checking account. It works the same way. The bank has actually borrowed that extra money in your checking account, but it will return it to you on demand.
SS is prohibited by law from using general revenues, but when SS revenues are borrowed by the government, they can be returned as needed in the same way. That's protection for unforseen shortfalls, such as in a recession year where SS collections are down and more people opt for retirement when they lose jobs.
The only thing that changed was that Reagan *increased* SS taxes beyond what was needed to maintain a simple cushion, to generate an ever-increasing surplus over 30 years.
That's how the TF got so big -- because the taxes circa 1983-2000 were significantly more than needed to fund then-current retirees.
But the TF has always been there, and it always represented money borrowed by the feds from excess SS taxes.
You have the general picture right, but the focus wrong. Congress cannot do anything other than spend excess SS collections. The problem is not that it spent them, but that so much excess was collected in the first place.
And, as you say, that some would prefer not to have to pay it back.