Carol Perry: Dig deep to learn about Social Security

I was pleased to see that the readers are not just taking my word on everything.

I have suggested that those interested in understanding how Social Security is funded go to the SSI website, but do not stop there. Please dig a bit deeper and also go to the Congressional Budget Office and Government Accountability Office websites to fully understand how the Social Security Administration derives their funding for benefits, now and in the future.

What anyone willing to sift through the volumes of pages put out by all these agencies will find is a few things that don't quite jibe with the belief that Social Security is fully funded.

First, it is true that the assets in the trust fund are U.S. Treasury securities, but what are those? I was a bond trader for many years as well as a financial planner so I will make it short and sweet. A treasury security is a debt or loan to the U.S. Treasury where an individual or entity purchases, with real money, let's say a $10,000 two-year note. That means that the lender pays to the treasury $10,000 and the treasury pays that person or entity interest on their money. In two years, the treasury will return the $10,000.

A treasury bill, bond or note is backed by the full faith of the U.S. government, so essentially it is an IOU or promissory note. The Treasury acknowledges that it owes the Social Security Trust Fund around $2.5 trillion currently. If someone else must provide their own money to obtain a Treasury security, who is the one financing this debt? It comes from the lender to the treasury, not the other way around. Other than the real money coming in currently from FICA taxes, the fund is made of debt.

Let me try another angle to see if this makes things clearer, because I really do understand that it is often difficult to understand all the nonsense government agencies print to keep you in the dark.

Each year the annual budget is drawn up and we usually see it as a pie chart of liabilities owed by the U.S. government for the coming year. First or largest on the list is Medicare, second is Social Security, and those numbers grow every year.

If Social Security is fully funded until 2040, why is it a growing annual liability that must be funded? Let's say it is for accounting purposes only. Then there would be an offset in assets/income each year from the Social Security Trust Fund that would essentially zero out the liability, right?

When I look at what is coming in to pay for that big pie chart, I just see fees and taxes. Where is the real money in the trust fund? It should be there, after all the baby boom overfunded it with FICA withholdings for years so it should be right there in real money waiting to be printed into checks to pay benefits.

Well, it should be. I encourage all of you to question what you think you know about Social Security and do not stop until you have the answer, not the one that makes you feel good inside. The current facts are that we owe $14 trillion in current debts. Future liabilities like benefits for all the baby boomers are unfunded, meaning no real money, just piles of treasuries.

Those already receiving a check from Social Security will most likely not see changes in benefits, but that is due to the ratio of people working to retirees getting benefits. As a boomer, by the time I am 65 the ratio will be close to 2 working to 1 retiree.

Why do you think we hear so many people talking about cuts, raising taxes, etc? If there truly was real money in Social Security there would be no need to do either. The truth is that what is diminishing is actual working people, not treasuries, and there is where the problem is.

The baby boomers were the largest generation born, not just in the U.S., but globally. That has created first an overfunding of Social Security and, when they retire, a deficit.

I said that I would place "I.O.U.S.A." the documentary and book on reserve and I have yet to do so. I will make this available to anyone who wants to understand the nation's budget, assets and liabilities.

Thanks for questioning me and looking things up. Keep looking and you may become as alarmed about the national debt as I am. Congress must raise the debt ceiling again this quarter or no one's check will be in the mail. Think about it.

• Carol Perry has been a Northern Nevada resident since 1983. You can reach her at carol_perry@worldnet.att.net. Her business columns appear the second and fourth Sundays of each month.