The Trust Fund Lives

Max Sawicky sawicky at
Fri Jul 31 11:13:20 PDT 1998

The Trust Fund is an account. Note that if you have a savings account, "your" money is never actually in a box somewhere in the bank. If you like, the Treasury could print up some pieces of paper with the word "bond" and put them in a box next to Alan Greenspan's bathtub. Nobody would notice the difference.

The Trust Fund is backed by the majestic power of the State to extract revenue from people. Funny how people -- especially conservatives -- inflate the big, bad State but discount its ability to enforce its financial obligations.

The virtues of the Fund include its role as a record of aggregate payroll taxes paid which are dedicated to social insurance. That they are borrowed for other purposes is irrelevant. If the Fund put its surpluses in a bank, somebody else would still borrow them for some other purpose. One entity's saving is always another's borrowing.

The Keynes quote is illuminating but irrelevant. The trust fund does not make actual provision for future consumption. Finance cannot do so, as Keynes via Doug point out. Rather, the Fund helps to establish future claims to consumption. Who gets what is, among other things, an accounting matter.

Left and right attacks on the legitimacy of the Fund weaken the future claims of workers to their benefits.



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