The Social Security Trust Fund Is Just a Stack of IOUs in a West Virginia Filing Cabinet

The Social Security Trust Fund every retiree is relying on is not what most Americans believe it is.

The Social Security Trust Fund every retiree is relying on is not what most Americans believe it is.

The brutal truth is this $2.85 trillion fund, which is supposed to keep the Social Security program solvent until the year 2033, has no money in it whatsoever.

The entirety of the Social Security Trust Fund is held in "special obligation bonds," a type of government bond issued for a single purpose (in this case, the funding of Social Security benefits).

In other words, this "fund" is actually debt.

And unlike marketable Treasury bonds, these special obligation bonds can't be sold. They only have value if the U.S. government buys them back.

They also differ from marketable Treasuries in that they exist in paper form. All of them are stored in two loose-leaf binders in a filing cabinet at the "Bureau of Public Debt" in Parkersburg, W.Va.

But what many people fail to realize is that what the paper bonds represent isn't money that can be sent to Social Security beneficiaries, but debt owed by the U.S. government.

President George W. Bush made that clear on a little-remembered visit to Parkersburg in April 2005:

"A lot of people in America think there's a trust, in this sense -- that we take your money through payroll taxes and then we hold it for you, and then when you retire, we give it back to you. But that's not the way it works.

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