US Government Has Borrowed Trillions From Social Security Trust Fund

Remember the debt ceiling situation in the summer of 2011?

Remember when President Obama said that the government may not have the money to send out social security checks if the debt ceiling wasn't raised? Here was his exact quote:

"If we default, we would not have enough money to pay all of our bills -- bills that include monthly Social Security checks, veterans' benefits and the government contracts we've signed with thousands of businesses."

Many people didn't really understand this quote - after all, doesn't the Social Security trust fund have TRILLIONS of dollars in it? Even if the US defaulted on its debt, couldn't the Social Security trust fund just ship out checks using the trillions of dollars that are surely safely nestled away in some account?

Let me hit you with this line that contained in the 2012 Social Security and Medicare Boards of Trustees report:

"Federal law requires that all excess funds be invested in interest-bearing securities backed by the full faith and credit of the United States. "

For Social Security, the OASI (Old-Age and Survivors Insurance) and Disability Insurance (DI) trust funds currently list trillions of dollars of assets. Here is the breakdown:

End of 2011 Assets:

OASI - $2.5241 trillion
DI - $153.9 billion

However, instead of cash, these two trust funds have IOUs from the US government. All of those assets are held in "special non-marketable securities of the US Government". So, the US government borrows from the OASI, DI and many others to finance its deficit spending.

As a matter of fact, as of this second, the US government currently has "intragovernmental holdings" of $4.776 trillion. "Intragovernmental holdings" is money that the government owes to programs such as OASI, DI and many others. This is money that will have to be repaid down the line.

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So - how much does the US government owe the Social Security Trust Fund? Let's look to the most recent "Monthly Statement of the Public Debt of the United States" (courtesy of TreasuryDirect.gov, *.pdf) to get the answer.

On Page 9, we see that the outstanding amount of Treasury Securities to OASI and DI are currently:

OASI - $2,596,371,000,000
DI - $139,145,000,000

So, that's almost $2.6 trillion for the Old-Age and Survivors Insurance trust fund, plus an additional $140 billion or so for the Disability Insurance trust fund.

Ouch.

Source: SSA.gov - Status of the Social Security and Medicare Programs