not only the fiction of it, but since 1938, by law, the trust fund buys T bills which are IOU's that the Government must pay back. FDR did that, and that is what it is. There is no mystery to it. It is a series of IOU's, and when those are outstanding and then the revenue from Social Security will not cover-- it is a pay-as-you-go, do not forget, Social Security is pay-as-you-go, and if it does not cover, you have to cash in the IOU's and you have to get more money through the payroll tax, or reducing benefits or issuing some new kinds of securities.
Alan Simpson: “not only the fiction of it, but since 1938, by law, the trust fund buys T bills which are IOU's that the Government must…”
Editor's note · Context
Discussing the mechanics of the Social Security trust fund and its financial implications.
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