The letter writer (Dennis Veal, Aug. 28) is confused about Social Security, and asserts the long-discredited lock box theory. Initially, Social Security was a pay-as-you-go system, and was not envisioned as having a substantial reserve. Indeed, Congress did not want reserves to be accumulated, as they might fund other federal projects.
Thus, the 1935 act as amended in 1939 did not require investment of excess funds — Congress effectively prevented the buildup of excess funds. In 1983 a reserve was provided for, principally to cover projected payout to the Baby Boomers. These excess funds are required by law to be “invested” in U.S. Treasury bonds, at whatever the available rate is.
Finally, in Fleming v. Nestor, the U.S. Supreme Court ruled that workers have no legally binding contractual rights to their Social Security benefits, and that those benefits can be cut or even eliminated at any time.
By the way, Social Security has been paying out more that it has taken in for several years, spending down the reserve.