Social Security Is NOT Selling Government Bonds

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Friday, 30 December 2011 06:31

In an article discussing the implications of the extension of the payroll tax cut, the Washington Post told readers:

"This year, the Social Security system projects that it will pay out $46 billion more in benefits than it will collect in cash. It made up for the shortfall by redeeming Treasury bonds bought in years when there were cash surpluses."

This is not true. The Social Security trust fund is projected to earn $114.9 billion in interest on the bonds it holds. It will use a portion of these earnings to pay current benefits. It will not be redeeming its bonds.