CBPP: “Understanding the Trust Funds.”

The Center on Budget and Policy Priorities has published a “Policy Basics” article providing background on the Social Security Trust Funds and how they work.

Few budgetary concepts generate as much unintended confusion and deliberate misinformation as the Social Security trust funds. Despite being described by some as “funny money,” or “IOUs,” the Social Security trust funds are invested in Treasury securities that are just as sound as the U.S. government securities held by investors around the globe; investors regard those securities as being among the world’s safest investments. Although Social Security has a long-term financial shortfall that must be closed, the program’s combined trust funds will not be depleted until around 2034, which gives policymakers time to develop a carefully crafted solvency plan.

You can read the whole document here.

It’s a good piece as far as it goes, but a casual reader of the Center’s article wouldn’t come out understanding why there’s much controversy regarding the funds and whether they’re “real.”

I tried to provide some background on that issue in this 2008 post, one of the first I made to this blog. I think it’s helpful in making the controversy over the trust funds easier to understand.