Treasury Acknowledges Social Security "Trust Fund" is Meaningless
Investment bankers are excruciatingly familiar with the concept of "Notes to Consolidated Financial Statements." It's where all the work -- and reward -- is to be found in stock analysis.
But I must admit I had no idea that the Federal Goverment issues its own "Notes to Consolidated Financial Statements." I'm a stock guy -- I don't do Treasury securities.
And look what's in those Notes:
In other words, the only reason the Treasury Department calls the Social Security "trust fund" a "trust fund" is because Congress ordered them to.
Now, the idea of "intracompany eliminations" is S.O.P. in mygreedy industry. In other words, if one subsidiary of KipCorp owes money to another subsidiary of KipCorp, then, from the point of view of KipCorp's investors, such accounting complexities must be netted out, because they have no real economic meaning.
Wall Street gets it. The Treasury Department gets it. President Bush gets it.
The AARP doesn't get it. Rock the Vote doesn't get it. Most Democrats don't get it.
Do you get it?
Hat tip to Social Security Choice.
But I must admit I had no idea that the Federal Goverment issues its own "Notes to Consolidated Financial Statements." I'm a stock guy -- I don't do Treasury securities.
And look what's in those Notes:
In the Federal budget, the term “trust fund” means only that the law requires a particular fund be accounted for separately, used only for a specified purpose, and designated as a trust fund. A change in law may change the future receipts and the terms under which the fund’s resources are spent. In the private sector, trust fund refers to funds of one party held and managed by a second party (the trustee) in a fiduciary capacity.
Trust fund net assets represent the unexpended balance from all sources of receipts and amounts due the trust funds, regardless of source, including related Governmental transactions. These are transactions between two different entities within the Government (for example, monies received by one entity of the Government from another entity of the Government).
Intragovernmental net assets are comprised of investments in Federal debt securities, related accrued interest, and fund balances with Treasury. These amounts were eliminated in preparing these financial statements.
In other words, the only reason the Treasury Department calls the Social Security "trust fund" a "trust fund" is because Congress ordered them to.
Now, the idea of "intracompany eliminations" is S.O.P. in my
Wall Street gets it. The Treasury Department gets it. President Bush gets it.
The AARP doesn't get it. Rock the Vote doesn't get it. Most Democrats don't get it.
Do you get it?
Hat tip to Social Security Choice.
Posted by KipEsquire on
9 April 2005
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They are, after all, politicians.