Congressional Research Service corroborates MMT analysis of Social Security and "trust funds"

He's gonna be just fine.

Last year, I wrote this blog post, which detailed the monetary and actuarial realities of how the Social Security system operates. The main crux of that post was to demonstrate how federal fiat money is fungible. Our governmental system simply credits and debits accounts, with no "trust funds" necessary. Last week marked the 80th anniversary of this great program so there has been a flurry of attention to this issue once again (most of it, out of paradigm unfortunately).

Thankfully, last week the invaluable Congressional Research Service published a report on the operations of Social Security and the "trust funds." After reading through the report, I found the following passages which re-affirm our long held positions:

The Internal Revenue Service (IRS) processes the tax returns and tax payments for federal employment taxes and federal individual income taxes. All of the tax payments are deposited in the Treasury along with all other receipts from the public for the federal government.

Within the U.S. Treasury, there are numerous accounts established for internal accounting purposes. Although all of the monies within the Treasury are federal monies, the designation of an account as a trust fund allows the government to track revenues (and expenditures) dedicated for specific purposes. In addition, the government can affect the level of revenues and expenditures associated with a trust fund through changes in the law. 

Social Security tax revenues are invested in federal government securities (special issues) held by the trust funds, and these federal government securities earn interest. The tax revenues exchanged for the federal government securities are deposited into the general fund of the U.S. Treasury and are indistinguishable from revenues in the general fund that come from other sources.

As we have always said, the payroll tax revenues are deposited in the same Treasury General Account at the Federal Reserve as all other revenues. The checks are written out of this same account, like all other expenditures. Thats it!