It may come as a shock, no current law requires the government to repay the Social Security trust funds out of general federal revenues.
Current law mandates that when more Social Security payroll taxes are received than is needed to pay benefits, the surplus must be used on other government spending. When the government spends surplus S.S. revenues, a special bond (IOU) that accumulates interest is issued to the trust fund.
Current law does not specify how the government should come up with the cash to repay the trust fund.
President Bush has ruled out raising taxes. He is pushing to make tax cuts permanent. The only other options are massive borrowing or cut spending, including benefits. Congressman Ron Paul (Texas) introduced HR 219, a bill that would require the deposit of surplus S.S. taxes into marketable U.S. interest-bearing bonds (like U.S. savings bonds), or certificates of deposit at banks insured by Federal Deposit Insurance Corp. to protect such trust funds from the public debt. Any so-called fix to S.S. would only last until the government ran short of cash again.
Bob Jacobs, Payson