John Shaw: “I am glad the gentleman suggested that. The way the Social Security trust fund works, the way Social Security works…”

“I am glad the gentleman suggested that. The way the Social Security trust fund works, the way Social Security works, your FICA and payroll taxes are paid into the Social Security Administration. The money is paid out of the trust funds in order to pay the benefits, the survey benefits, disability benefits, pension benefits. The benefits that come out of Social Security are paid out of the trust fund. The monies that are left then go into the general fund. That is what we call the surplus. This is money that is over and above what is necessary to pay the benefits under Social Security. Surpluses by law are replaced by Treasury bills. These treasury bills are nonnegotiable Treasury bills which are IOUs by the government to the government. Mr. Greenspan testified before the Committee on Ways and Means and said these are really not economic assets. And you can compare them to writing yourself an IOU and declaring that as an asset. It is not an asset. It is simply an IOU by the government to the government. So we will continue to have surpluses, according to the Social Security Administration, until the year 2017. But beginning in 2017, the Congress is going to have to find the money to pay the benefits, whether it increases taxes, whether it cuts benefits, or whether it just simply goes into the red and produces this type of shortfall for the next 60 years. This is what we are facing and this is what future Congresses are facing.”