The Social Security Trust Fund is a myth and a hoax

IMPORTANT NOTE: This article is not anti-Social Security. It criticizes how the American left has led us to magical thinking about Social Security, that worthless IOUs are in fact a huge, redeemable asset that keeps Social Security solvent for many decades.

The Social Security “Trust Fund” is among the biggest lies of American liberals. It is just a fancy accounting trick, a la Enron and WorldCom.

Consider this analogy:

Sam sets aside money for a future expense, suppose for replacing his house’s A/C. Sam knows it only has a year left, and he needs $2400 to replace it.

Sam save $200 per month. He puts it in the piggy bank on his dresser. At the same time, he “borrows” this monthly $200 so that he can live more lavishly: eat out more, buy more clothes, etc. He replaces this $200 with an IOU.

The 12 months passed. As predicted, Sam’s A/C conks out. Sam needs that saved $2400 to repair his A/C. He opens his piggy bank and finds 12 $200 IOUs. The A/C repairman only accepts dollars, not IOUs. Sam can’t magically produce this $2400, so he has to take out debt to pay the repairman.

Woah, what happene?

If you look at Sam’s savings and borrowings as separate activities, then yes, we can legalistically say Sam “saved” $2400. But only an idiot would look at it that way. Sam is one entity. The only way Sam can save money is if more cash comes in than goes out. That didn’t happen: Sam spent that $200 “savings” as soon as he got it.

What would happen if I replaced “Sam” with “Uncle Sam”?

Uncle Sam sets aside money for a future expense, say for a date about 13 years away when its senior retirement system starts paying out more than it brings in. Uncle Sam sets aside billions per month towards this expense, and he puts it in the piggy bank on his dresser. At the same time, Uncle Sam “borrows” every last penny of these monthly billions so that he can live more lavishly.

Suppose the 13 years have passed, and, as predicted, Uncle Sam needs to pay out more senior retirement money than he takes in? Uncle Sam needs to tap those billions he saved.

Uncle Sam opens his piggy bank and only finds 156 IOUs. Seniors need dollars, not IOUs! Uncle Sam can’t produce these billions of dollars magically, so he has to take out billions and billions of additional debt each year to pay the seniors. (Or he can stiflingly raise taxes or drastically reduce spending or devalue the currency.)

That piggy bank is the mythical “Social Security Trust Fund.” Sam’s piggy bank and Uncle Sam’s “trust fund” are both full of worthless IOUs.

Instead of “IOU,” I could have written “federal bond.” The concept is the same. When you owe money to yourself, it’s an IOU. If the federal government buys its own bond, that is also an IOU. You can’t enforce debt you owe to yourself, so an IOU is just an accounting trick.

How does the government “invest” in its own bonds?

A payroll tax finances the Social Security system. Right now this tax pulls in more than the system doles out in retirement benefits, leaving a surplus. Social Security technically “invests” its surplus into US bonds.

Who issues US bonds? What is the Social Security part of? The answer to both questions is “the federal government.” So the federal government is buying bonds from itself!

You can’t owe money to yourself. Again, that is an accounting trick. A more realistic way of looking at the big picture is that Social Security surpluses are diverted to Congress to pay a chunk of our $2 trillion annual federal budget. Congress has become dependent on this chunk to maintain current spending levels. (See

US federal government indebtedness is in two major parts: the “accounting trick” IOU debt and externally held debt, which is are bonds owned by private individuals, foreign governments, corporations, state and local governments, pensions, and mutual funds.

When it comes down to it, the externally held debt is all that matters. A single bill of Congress can legally wipe away all internal debts; again, remember that internally held debt is just IOUs, paper tricks, accounting shams.

A recently published figure is that all US indebtedness is over $7,300,000,000,000 (source). Of that, about $3,800,000,000,000 (52%) is internal debt, the IOUs. The true United States indebtedness, i.e., debt held by external entities, is “only” $3,600,000,000,000.

What is going to happen between now and 2018? Social Security’s payout will gradually increase to where it is 100% of payroll tax revenue. As this happens, Social Security can transfer less and less money to Congress, so we will increasingly see one or more of more taxes, less spending elsewhere, more debt, or devaluing the dollar (printing more money).

When 2018 finally hits, when Social Security transfers $0 to Congress, it just gets worse. Plain and simple, there is no simple fix.

Irresponsible American liberals treat the Social Security system as a separable, independent unit of the US government. They wrap that with complex theories about “contracts” and “generational entitlement” and so on.

No matter how many words apologists throw at that logic, they still cannot escape that the IOUs are worthless.

We’ve got to stop magical thinking. The federal government and all its programs wrap up into one entity. It has various forms of income: income taxes, payroll taxes, tariffs, fines, etc. And it has various forms of spending: military, welfare, Social Security, etc. We will never solve Social Security’s problems until leaders start taking such a holistic view.

Master bathroom shower adventure

A few days ago, I had this bright idea that I would replace the shower arm and flange in my master shower. My master shower is really small, and its shower arm is a whopping 9” long.

I tried to unscrew the shower arm, but it wouldn’t budge. After a lot of straining, I finally got some movement, and then I got that sickening feeling of “something turning not for the right reason.”

It turns out that I separated the 90° piece from the copper pipe! In the process of getting the arm out, I also broke some tile. (I stupidly believed that if I yanked hard enough, the surrounding tile would neatly come off. NOT!)

The enlarged opening, with a mangled copper pipe behind it:

The 90° piece that’s not supposed to come off:

This is not even the correct piece for showers. The correct piece would have bolted up to a piece of wood on the back, making it impossible for it to have twisted the supply line like this.

This is bad. Now I have to take apart some of the shower wall.

Fast forward to today.

I start out with a hole in my shower wall:

I used a Dremel with a cut off wheel to remove the grout between that tile and the adjacent tiles. Here’s the Dremel with the cut off wheel installed:

This was just the standard, fiberglass-reinforced metal cutting wheel.

I went through 1½ of those wheels to remove the grout. Here’s a detail shot:

(I love 5 megapixels! This shot was taken at a distance.)

I tried cutting through the drywall behind the tile with a hacksaw blade. I couldn’t get good leverage or speed, so it was plodding slowly and sloppily. A trip to Home Depot and a compact hacksaw purchase saved me:

With this thing I just sailed through the drywall.

Hallelujah, the tile and drywall are out, and better yet there is drywall behind the drywall! I have a surface to glue my drywall square to when I am done. Take note of the mangled pipe:

Here’s the drywall/tile square:

A few minutes later I hacksawed the mangled piece off the end of the supply line:

Here it is:

Uh, oh, notice the not rounded shape? Argh!

I spent the next several minutes coaxing the supply line to a rounded shape so that I could fit a coupling over it. After massaging with some channel lock pliers and a Dremel bit and hammering the coupling on with the pliers, I finally got the coupling over the supply line.

Notice in a previous picture how there is a large wood piece behind the supply line? I measured that there is a ¾” gap between this wood piece and the supply line. Luckily, I had ¾” thick wood in the garage. A few minutes later and this is what I ended up with:

The two wood screws on the top were only about 1” long. That’s all I had. That left a scant ¼” of screw length to bite into that other wood piece, so I had to countersink their holes just over ¼”. That way these wood screws could bit and secure themselves in the backing wood.

Before I went too much further, I placed the tile back into position and put a copper pipe through to line up where the piping needs to end up:

This let me put some crosshatches where things should end up:

You’re looking through the tile to that wood piece I bolted on.

A few minutes later I sweat soldered the coupler to the supply line:

Notice the burn marks? I aimed a propane torch at the pipe while soldering. The fire wandered a bit.

Before making the final solder, I need to test fit everything:

I somehow managed to make the pipe end up just a hair to the right of where it used to be. In the end it still worked out OK. See the washers behind the supply line? In the process of mangling the supply line and forcing the coupler on, I bent the line a hair so that it was slightly angled away from me. I used the washers to force the line to face parallel to the wall so that I could slip the 90 degree fitting in.

By the way, I had already soldered a short length of copper pipe to the 90 degree fitting that the shower arm is screwed into.

Now I sweat solder the last joint, the top of the coupler:

The wood is even more scorched! The top left side burned on its own at one point. I was able to just blow it out.

Now it’s time for a leak test:

Passed with flying colors! (The only thing that leaked was the pipe plug itself. I didn’t screw it in tightly enough.) Oh, yeah, notice that the 90 degree fitting is now screwed into the wood piece.

Liquid Nails will hold the tile/drywall square once I put it back on:


Fixing the broken tiles with latex caulk:

It’s not a perfect cosmetic fix, but it will keep the area dry at least.

Doesn’t look that bad:

My very messy grout job:

Here’s the whole thing all cleaned up with a new showerhead:


I was going to replace the shower arm in the hallway bath, but I changed my mind. That shower arm is not secured to anything, so I would probably be stuck with the same situation if I mess with it.