Did Congress steal Social Security money? NO! - AMAC & The Motley Fool
It’s one of the most pervasive myths pertaining to Social Security– that Congress stole program funds for wars, social welfare spending, or a host of other programs. As such, we are republishing a piece about this urban legend gone wild here, though articles are written often that debunk the idea. It seems it’s just one of those things that everyone has heard and thus knows to be true. The problem is it is NOT true.
With a simple, common sense explanation, and by using easily understood analogies, Sean Williams of The Motley Fool thoroughly debunks the myth. The myth largely originates from 1969 when Social Security funds were put “on budget” with the rest of federal spending. The federal government has indeed borrowed Social Security’s asset reserves, as this is required by law. The Social Security Administration invests reserves into special-issue bonds and certificates of indebtedness which the federal government utilizes to fund many budget line items from military to education to healthcare. Note, funds borrowed from Social Security are not earmarked for any specific federal program. But, Social Security is paid interest on what is lent to Congress at a rate of about 2.844%. For the past several years interest income has contributed more than 8% of all the money Social Security collected in revenue each year. Williams uses the example of a bank CD to debunk the “stolen” idea further by reminding folks that any money deposited in a bank CD was likely lent out to other entities within weeks. Did the bank steal it? No. The deposit was still there to be fully redeemed with interest (better than leaving it under a mattress) by the depositor on maturity. Read the full piece here.