The focus of today's hearing is that very topic - the implications of investing trust fund money in the stock market. Before we go any further I think it is worth while to explain the role of the trust funds. There has been a lot of misinformation and just plain ignorance over the years. That is unfortunate because it is difficult to honestly debate reform proposals when there is misinformation clouding the issue. The Social Security trust funds are an accounting device used by the government in order to keep track of the money going in and the money coming out.
Current workers pay taxes which fund the benefits of current beneficiaries.
The system has always worked this way. This was not a problem in the early years of the program when the system was paying out in benefits what it took in in revenues. Back in the 1980s, this has changed. While still more or less pay as you go, we have a cash surplus in our unified budget, thanks to Social Security. The idea of investing trust fund revenue in the stock market is a move toward pre-funding some of the retirement income promises we have made to the country's retired workers and those who are working age but are unable to work.